I think the short-term chart in oil is instructive.
WTI tried three times to break above $80.50 but failed and has now fallen to $79.17 from a high of $80.40 just before the US jobs report.
I’m an oil bull but I’m skeptical of the latest rally from $76 to $80. Outages in Libya are mostly back online and protests in Kazakhstan have calmed.
Meanwhile, omicron is taking a bite out of gasoline demand and China today told people in Shenzhen not to travel after two cases there of local transmission. There’s a good chance that Chinese lunar new year travel will be significantly curbed this year with risks to the downside in the event of more cases. Globally, air travel has taken a big hit and the US SPR barrels continue to hit the market.
On the flipside, gas prices remain high enough to draw gas-to-oil switching and that bears watching.
Ultimately, I think we blow past 2019 demand after the omicron wave is sorted out in the whole world (including China, where there will eventually need to be a shift towards living with covid) but that might not be until late next year.
A growing worry — one I’ve highlighted for a long time — is that OPEC+ doesn’t have the supply it purports. That, combined with underinvestment elsewhere, could leave the world in a material shortage of crude.