- PMIs continue to point to a weakness in demand
- OPEC+ holds the key to crude oil prices
- Lost momentum ahead of recent decline
It’s been a volatile start to the week for oil, with prices initially rising before falling negative to trade almost 2% lower on the day.
We’ve had a vast selection of PMIs to bear in mind today, as well as speculation around the OPEC+ decision on Wednesday and, of course, the US averted a government shutdown.
I’m not sure all of this is a net negative for oil, per se, but it was trading at very high levels prior to this and had already started to lose momentum so perhaps what we’re seeing is a case of profit-taking. Especially given the proximity to the OPEC+ meeting on Wednesday.
Source – OANDA on Trading View
The recent decline in BCOUSD came following a rally and new high that failed to be backed up by stronger momentum and now it appears to have potentially moved into a corrective phase.
A divergence often isn’t followed by such a sudden corrective move and this may also quickly reverse higher again but the moves over the last few days are not small.
The price is now testing last week’s lows and a break below may point to further declines, with support in the $88-$90 region potentially key.
Ultimately, though, the OPEC+ decision on Wednesday may dictate the direction of travel.
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