Crude Oil Update: Moderna Eyes Early 2022 for Omicron Vaccine, ‘OPEC+’ Delays Technical Meeting


Crude Oil Latest: Travel Restrictions, Omicron vaccine, OPEC +

  • Crude Oil’s Black Friday sale and markets seem cautiously optimistic around Omicron
  • Special OPEC+ monitoring committee meeting pushed to December 2nd to analyze Omicron effect on oil demand and supply
  • Key technical levels for Brent crude oil
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Crude Oil’s Black Friday sale

Friday saw the largest single day drop in crude oil since 2020, dropping over 10%, as fears of the new coronavirus variant ‘Omicron’ filtered through to the oil market amid lockdown concerns and freshly issued travel restrictions. For more, see the full report by Warren Venketas.

Quite a lot has transpired since then. Numerous countries have detected Omicron cases (UK, parts of southern Africa, Australia, Belgium & Netherlands to name a few) with the World Health Organisation (WHO) cautioning that understanding the variant’s severity could take weeks. Dr Angelique Coetzee, a South African doctor, noticed differing symptoms in patients when she suspected a new variant. Since then, early observations of patients infected with the new variant have experienced “very, very mild symptoms” being able to treat patients “conservatively at home”.

In pre-market trade Moderna rises around 11% as its chief medical officer Paul Burton mentioned that a Omicron-specific jab could be ready by early 2022 in the event that current vaccines are shown to ineffective against the new strain.

OPEC+ Monitoring Committee to Assess Omicron Effect

OPEC’s Joint Ministerial Monitoring Committee (JMMC) was originally scheduled to meet on the 30th of November but agreed to move this to December the 2nd – the same day the as the main OPEC+ ministerial meeting – to acquire more information about Omicron and its potential effects on oil demand.

OPEC had already factored in an increase in oil stocks heading into 2022 before Friday’s events and even before US President Joe Biden’s coordinated effort to release strategic petroleum reserves along with Japan, China, India, South Korea and the UK. In addition, a mid-November report from the International Energy Agency (IEA) foresees excess oil supply for 2022 assuming OPEC+ unwinds cuts and Iran remains under sanctions.

Source: IEA, Refinitiv

Crude Oil Technical Analysis

There has ben a modest pullback in response to Friday’s sell-off, driven mainly by vaccine optimism and mild symptoms being reported by the majority of patients. However, it may be weeks before all of this will be known for sure, which echoes the guidance from the WHO.

As such, the cautiously optimistic sentiment is viewed in the charts via the modest pullback, lacking full conviction to trade at levels witnessed before Friday at around $79/80. Friday’s drop was strongly supported by the 50% Fib of the July to August decline, providing a sharp level of support. Price action trades largely up but has not yet been able to move above the $75.50 – $76.33 zone of resistance.

Daily Crude Oil Chart (including Sunday candle)

Chart prepared by Richard Snow, IG

When looking at the weekly chart, it is clear to see how crucial the $71.08 level has been in the past, capping upside moves and now providing strong support for crude oil. The long term ascending trendline provides further support to the oil market suggesting that the bull run is yet to break down.

Expect the oil market to become even more sensitive to news headlines in the coming days/weeks in the lead up to the OPEC+ meeting on the 2nd of December and as more information becomes available about Omicron’s severity and level of transmission.

Crude Oil Weekly Chart Showing LT Trendline and Key Support

Chart prepared by Richard Snow, IG

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX