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US oil bulls hold steady amid omicron spread

Crude oil futures started the first week of 2022 on a positive note amid omicron spread, focus shifts to OPEC meeting.

US oil bulls hold steady amid omicron spread

Crude oil prices rallied more than 55% in 2021 driven by the world economic recovery and supply-side issues. During the last week, the oil prices ended higher supported by supply disruptions from Libya and larger than expected falls in US crude inventories. However, the gains are limited as the Covid-19 surges worldwide due to the Omicron variant.

On Monday, oil futures started the first week of 2022 on a positive note. The upside momentum boosted after Libya announced on Saturday to cut its production by 200,000 barrels a day for a week because of a damaged pipeline. Meanwhile, the workers are now trying to fix the damaged oil pipeline.

Moving ahead the traders of US and Brent oil are now focusing on the meeting of the Organization of Petroleum Exporting Countries and its allies (OPEC+) later this week. The Meeting is scheduled for tomorrow, 4 January. The market participants expect the OPEC+ is expected to stick with its planned output of 400,000 barrels per day.

Saudi Arabia's King Salman said last week the OPEC+ production agreement was needed for oil market stability and that producers must comply with the pact.

WTI weekly technical forecast

In the short-term perceptive, the immediate bias will remain bullish if prices are held above 70.00. On the downside, the first nearest support level is located at $75.00. In case if it breaks below this level, it will head towards the next support level which is located at near $74.00 then $73.60. On the flip side, the immediate resistance is seen at $76.50 any break above this level will open $77.00/50 minimum.

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In the long term, watch for the weekly close below $70.00 or above $79.00, which will give a larger confirmation of direction in the long term.

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