China’s weaker economic prospects led by rising Covid-19 infections are weighing on oil prices. (Pivot Orderbook analysis)

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• China’s weaker economic prospects led by rising Covid-19 infections are weighing on oil prices.
• An unchanged PBOC’s monetary policy has also dampened expectations of a recovery in oil.
• Expectations for the less-hawkish Fed’s policy are failing to support black gold.

The pair currently trades last at 79.37.

The previous day high was 82.4 while the previous day low was 77.6. The daily 38.2% Fib levels comes at 79.43, expected to provide resistance. Similarly, the daily 61.8% fib level is at 80.57, expected to provide resistance.

West Texas Intermediate (WTI), futures on NYMEX, have faced barricades while attempting to cross the psychological resistance of $80.00 in the Asian session. Earlier, the asset made an effort for a rebound after refreshing the seven-week low at $77.58. The oil prices could test their two-month low of around $76.17 as the Chinese administration has resorted to Covid-19 restrictions again due to accelerating infections.

Last week, the Chinese government decided to remove restrictions on the movement of men, materials, and machines to resume normal business activities. However, a steep rise in Covid-19 cases dented the market mood. Investors are in dilemma whether to turn risk-averse due to accelerating Covid-19 cases or pour liquidity as restrictions on the movement of men, materials, and machines are waiving now.

To contain the Covid-19 outbreak, the administration has announced China’s southern metropolis of Guangzhou has been locked down for five days. The city of 19 million has become the epicenter of China’s latest Covid outbreak which is the worst since the start of the pandemic to have hit Guangzhou. Also, Guangzhou city is an economic powerhouse for China and a global manufacturing hub.

Apart from that, the maintenance of status quo by the People’s Bank of China (PBOC) may also hurt oil prices. The PBOC was expected to sound dovish as deteriorating economic prospects and vulnerable real estate demand were demanding an expansionary monetary policy.

Meanwhile, expectations of less-hawkish monetary policy by the Federal Reserve (Fed) are not supporting oil prices. The Fed is looking to trim consumer spending as it could be the only measure that can dilute mounting inflationary pressures. Also, major economies are expecting a recession situation as supportive to curtail price pressures.

Technical Levels: Supports and Resistances

XTIUSD currently trading at 79.37 at the time of writing. Pair opened at 80.2 and is trading with a change of -1.03 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 86.55, 50 SMA 85.39, 100 SMA @ 89.12 and 200 SMA @ 97.29.

The previous day high was 82.4 while the previous day low was 77.6. The daily 38.2% Fib levels comes at 79.43, expected to provide resistance. Similarly, the daily 61.8% fib level is at 80.57, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 77.74, 75.27, 72.93
• Pivot resistance is noted at 82.54, 84.87, 87.34

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