Brent crude has been tumbling in recent weeks, forced lower by slowing growth, a coordinated SPR release, and this past week, the new Omicron variant.
OPEC+ had an opportunity to arrest the slump today and at first, it appeared they’d passed it up. But the decision to maintain not change their planned increases each month came with an important caveat, that they would do so at any point if they think it’s warranted.
In other words, they didn’t have enough data to hand in today but if that arrives at any point between now and the next meeting and warrants an adjustment, they’ll do so immediately.
With crude off its lows and higher on the day, has it bottomed out? Possibly. But that will depend on the information that appears over the coming weeks and how bad it is for the global economy.
In the meantime, the price had been falling prior to the announcement but as you can see on the 4-hour chart, it was losing momentum all the time. So the caveat provided the excuse the market was already hoping for.
Has Oil Bottomed?
While we may see some tests around the 38.2 and 50 fib levels on the way up, the big test above here lies around $76.50 where the 61.8 fib on the 4-hour chart coincides with the bottom of the channel, 55/89-period SMA band, and a major prior level of support and resistance. A move above here could put us back into more bullish territory.