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The overnight fall, the result of growing downside risks to demand as a fourth wave of Covid-19 cases in Europe, has prompted some countries to reinstate lockdowns mainly for the unvaccinated and speculation of Christmas in Europe incorporating social distancing requirements.
Speculation that China and the U.S. may coordinate efforts to release oil reserves to dampen surging inflation is also weighing. A subject canvassed during the two Presidents' virtual summit earlier this week.
Potentially as a follow-up to this, China's state reserve bureau said today it is preparing for a release of crude reserves. However, it declined to detail if it was the start of a coordinated action with the U.S or China acting independently.
We have mentioned previously, including here a strong seasonal pattern for crude oil to rally ahead of the Northern Hemisphere summer before, peaking in October and retreating into year-end. At this point, it's worth noting the $85.41 high traded on October 25th.
Before jumping to hasty conclusions, the pullback from the $85.41 high to today's $76.76 low appears corrective/countertrend in nature, and should crude oil hold above a band of support $76.90/20 coming from July's highs and then trade above $80.00, it would set up a retest of the $85.41 high.
Aware that should the decline extend and close below support at $76.90/20ish, it would indicate crude oil has formed a medium-term tradable top at the October $85.41 high and that a deeper decline back towards $70.00 is underway.
Source Tradingview. The figures stated areas of November 18th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
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