Oil kicked off the trading week with heavy declines as a new wave of coronavirus restrictions and lockdowns in Europe heightened concerns that global demand for the commodity will take another hit.
The Netherlands has entered a full lockdown and Germany and the UK, the world’s fourth and fifth largest economies, are considering a Christmas lockdown.
At the time of writing, Crude Oil is down 6. 24% with a barrel of crude trading at $66.45 having closed week above $70. Brent Oil is down 5.8% with a barrel of Brent oil trading at $69.71.
As well as the concerns over the impact of the Omicron variant, oil is under pressure in the technical analysis charts. The sharp slump on Monday morning sent Crude Oil WTI and Brent Oil below their 200-day moving averages. A consolidation below that line means that the current price is below the annual average. This is a trigger that can often cause exits from funds.
OPEC+ (Organization of the Petroleum Exporting Countries, Russia, and allies), said at their last meeting earlier this month that the organization could meet ahead of their scheduled meeting on January 4th if the spread of Omicron severely impacts global oil demand.
Bearish Sentiment Rules Monday’s Markets
Adding pressure on oil and increasing the bearish sentiment was the news that President Joe Biden’s $1.75 trillion domestic investment bill is, in its current form, now unlikely to pass through the Senate, denying the U.S. economy of another jolt of economic stimulus.
Meanwhile US stocks all opened lower and the US Dollar was down in most trading pairs.
Summing up the decline in oil and the markets in general, analysts at XM Group said in a note:
“With a sword hanging over the outlook for economic growth and little prospect of more stimulus to counter the slowdown, risk aversion is the name of the game on Monday,”
