I’m not going to draw any fancy lines on the chart, but a look at the monthly oil chart stands out due to the impending mirror image of April 2020 when prices turned deep negative to leave only a largely unchanged candle.
This time it’s a different geopolitical event, but much the same looking with price ending the month roughly where it started in trading that was almost as volatile. Today, WTI Crude Oil fell $7.17 to $100.69 after briefly hitting $100.
If we see a deeper retracement, it will likely be due to covid again. Shanghai extended its lockdown today for another 10 days and extended it to new parts of the city. Nationwide, there have been more than 8,000 new covid cases in China and President Xi this week doubled down on his “dynamic zero covid” policy.
If the lockdowns were to become widespread, it could severely undermine demand for rough among China’s 1.4 billion people.
Biden also announced today the release of 180 million barrels from the SPR, which could help balance the market in the near term.
A final factor to watch is Iran and a possible nuclear deal. At times it has seemed extremely close, but the latest signals have been more mixed.