Oil holds light bounce awaiting OPEC+ meeting

WTI up a little over 2% around $67

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It is tough to get too optimistic about oil prospects at the moment as omicron fears are still weighing quite heavily on the fundamental backdrop.

But since the peak in October, oil is down by over 21% with the bulk of that drop coming amid the plunge last Friday as the omicron variant went mainstream.

So far this week, buyers have taken in some light comfort in the early stages only to see things all crumble by the time we’re headed towards the daily settlement close.

While that has been a familiar theme, today’s story will largely hinge on OPEC+’s decision on whether or not they will pause their monthly output hikes in January next year, as the reassess and weigh up how the omicron variant will play out.

As much as omicron worries still has the chance to of not being too severe once there is more clarity in the weeks ahead, just be mindful that oil market sentiment right now is looking rather fragile – and the technicals are also not helping in that regard.

I fear if OPEC+ decides to let things slide today, we may see another flush lower in oil perhaps back towards the August lows of $61.75.

That will be the next key test before getting to the pivotal $60 mark but considering the massive slide since October, it would be hard to resist any bargain hunting at those levels for a medium-to-long-term setup for oil.