• WTI bears are moving in at a critical juncture.
• A break of horizontal support leaves the downside exposed.

West Texas Intermediate is higher on the day so far, up over 2.45% at the time of writing, having ranged between a low of $76.03 and $79.61 so far. The price has been consolidating at the top of a channel and the prior day’s short squeeze. Risk markets were soft amid light activity as month-end approaches.

Meanwhile, West Texas Intermediate was bid on the hopes China is easing its strict zero-Covid policies while OPEC+ decided to meet virtually for its Dec.4 meeting to set production quotas. The good news came for markets when China’s government announced that it will boost Covid-19 vaccination while stepping back from its quarantine policies.

Elsewhere, and despite market rumours, OPEC has not indicated it plans further cuts in its meeting as European sanctions on Russian oil imports take effect on December 5. Nevertheless, negotiations on a price cap for Russian oil go on. 

Analysts at ANZ Bank said that ”Germany warned it can’t rule out temporary supply bottlenecks when a ban on imports on Russian crude starts next month. OPEC also appears to be reducing output in line with its agreement to cut production.”

For the week ahead, the focus is on Federal Reserve Chairman Jerome Powell’s address on the economy and the US labour market in Friday’s Nonfarm Payrolls event. 

WTI technical analysis

As illustrated, the price is meeting the channel top, on the front side of the trendline resistance, breaking horizontal structure and posied for a downside continuation.