FxWirePro: Oil prices extend previous week's steep losses; China COVID crisis, recession fears weigh

Chart - Courtesy Trading View 

Spot Analysis:

WTI oil prices was down 0.91% at 79.41 at around 05:00 GMT

Previous Week's High/ Low: 89.82/ 77.24

Previous Session's High/ Low: 82.62/ 77.24

Fundamental Overview:

Concerns over rising COVID-19 infections in China and a potential global recession dampened the outlook for oil demand.

China has initiated new lockdown measures in some of the country’s biggest cities, stoking concerns of slowing crude demand in the world’s largest oil importer.

Recent weakness in oil markets has raised speculation over more supply cuts by the Organization of Petroleum Exporting Countries and its allies (OPEC+). 

The OPEC had announced its biggest supply cut in two years in October, and signaled that more such actions could follow to stabilize prices.

The cartel meets on December 4 to decide on production cuts, any further reduction in supply will likely to boost crude prices.

Technical Analysis:

- WTI oil prices extending weakness for the 3rd consecutive week

- Price action is below major moving averages which are trending lower

- GMMA indicator shows major and minor trend are bearish

- Momentum is bearish, Stochs and RSI are sharply lower, volatility is high

Major Support and Resistance Levels:

Support - 76.89 (Lower W BB), Resistance - 80.70 (110-week EMA)

Summary: WTI oil prices poised for further downside. Oversold conditions keep scope for some pullback. Bearish invalidation only above daily cloud.