Oil Dips Below $77 on Softer News From China

Oil prices remain in the spotlight today as volatility picks up. There were negative news for Oil over the weekend, with a drone attack which helped Oil open with a bullish gap higher, but then news from China weighed on the sentiment, which has been dragging crude $2.50 lower. However, the decline has stalled at MAs, which have been keeping WTI Bullish this month.

A drone attack that took place over the weekend killed three US crew in northern Jordan, raising supply disruption worries once again which sent Oil prices higher at the open in the Asian session. West Texas Intermediate WTI crude, one of the main three benchmarks in oil prices, began the week with a 20 pip gap higher and continued to make gains, almost touching the $79 level.

Late last week there were reports of missiles being launched at a fuel tanker in the Red Sea, resulting in an on-board fire which as responsible for the deaths. This fueled concerns that the attacks may escalate from container vessels to Oil tankers further ahead, severely hurting global Oil transport and supply.

But China’s concerns are back on the table and crude Oil made a quick reversal early this morning, giving back all previous gains, falling to $76.60s. There was news about China’s property giant Evergrande Group early today, after a court in Hong Kong ruled in favour of the liquidation of the company’s assets, which also is the property developer with the highest debt in the world.

This is negative for risk sentiment, hence the reversal in crude Oil. Investor confidence in China’s real estate sector takes another hit from this bankruptcy, as it will continues to weigh on China’s economy. Besides that, the global reality is sort of gloomy for Oil right now, as the market faces extensive Oil supplies and uncertain demand as the winter has been quite warm in Europe, while the cold snap in the US is over. So, Oil buyers seem unlikely to reassert themselves while Middle Eastern geopolitics remains in charge of the headlines.

WTI Live Chart