After a 1-2% pullback on Friday, the oil market opened the new trading week sharply lower, with the Brent price down 4%, barely holding above $70/bbl, while WTI is off 4.4%, slipping below $68/bbl.
In the Netherlands, a lockdown has been imposed until January 14 due to the spread of the Omicron variant. Moreover, due to the new strain of coronavirus, new containment measures are expected in the UK, Italy and several other European countries, which torpedoed the oil market. Meanwhile, stateside over the weekend, the chief medical adviser on Covid-19 to the President, Anthony Fauci, made a disappointing forecast about the development of the Omicron strain in the country. According to Fauci, hospitals in many states could be overcrowded within 2-3 weeks, exacerbating negativity on spooked frightened markets.
Brent has broken through several support levels over the past two trading days. The commodity is currently trading a tad above $70/bbl, and if this level is breached, it could slide back to the $67-68/bbl range. Our Brent price forecast for today is $68-70.5/bbl.