Daily Market Recap – USOIL Price per barrel stalls after 6 sessions of gains

Oil prices are beginning to pause in the short term after six consecutive sessions of gains. The pause comes after China's decision to cut the first batch of 2022 import quotas for independent refiners by 11%.

However, the outlook for oil prices remains positive. Reassuring news on the health front, in particular on the dangerousness of the Omicron variant, should deter governments from re-imposing strict health restrictions.

The evolution of health restrictions should continue to be the main catalyst for markets in the coming weeks. However, the upcoming OPEC+ meeting on 4 January will also be closely watched by investors. The cartel and its allies are expected to decide whether or not to continue increasing production.

From a technical perspective, WTI oil is starting to stall after rallying to its 2018 and 2020 highs at around $76.50. The outlook remains bullish, but the risk/reward ratio does not favor new buying below this resistance and after such a strong run-up in such a short time (+15% in 10 sessions).

It will probably be preferable to wait for the market to breathe or for the resistance zone at $76.50 to be breached before repositioning oneself as a buyer. If the market does breathe, the first major support to watch will be the $72.75 neckline of the ascending triangle from which WTI emerged at the top last week. The bullish outlook would be invalidated in the event of a pullback below the $72.75 neckline.

 (Chart Source: Tradingview 02.01.2022)

Beyond the resistance at $76.50, the next resistances to watch are the symbolic threshold at $80, then the October high at $85.

Support & Resistance Levels:

R3       85.40

R2       80.00

R1       76.50  

S1        72.75

S2        70.50

S3        66.15

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.