Crude Oil resumed the decline earlier this month, even as the USD was in the middle of a fast retreat lower, which was keeping risk assets bullish. But, the continuation of the coronavirus lockdowns in China hurt the sentiment for Oil, hence the bearish momentum.

US WTI crude opened with a bearish gap yesterday and continued lower, pushing to $73.60 but made a quick reversal on news that China might reopen soon. Hu Xijin was formerly an official spokesman for the Chinese government as chief editor of the Global Times but now he’s retired. At the same time, he still touts the party line on almost everything, so this could be the start of a big pivot from the leadership. He said that ‘China may walk out of the shadow of COVID-19 sooner than expected’. I can’t imagine he would be saying something like this if there was no plan to ease measures.

WTI Oil H4 Chart – Will the 20 SMA Hold As Resistance?

US crude Oil closed the gap yesterday

Crude Oil reversed higher and made some decent gains, ending the day positive at $76.91 from a low of $73.60 and it came after analysts at the Eurasia Group said that OPEC+ will ‘seriously consider’ an output cut next week. Analysts at Eurasia Group said in the report that “Given overall market conditions, OPEC+ will seriously consider a new production cut at its upcoming meeting, particularly if crude prices fall much below their current level in the next week”.

“Ultimately, the decision will depend on the trajectory of the oil price when OPEC+ meets and how much disruption is evident in markets because of the EU sanctions”. So, buyers are fading the 20 SMA (gray) on the H4 chart now, so let’s see if they can push above that moving average.