Outlook: A new strain of coronavirus found in South Africa and now in a few other parts of the world may possibly be vaccine resistant. This is fanning fears of lockdowns which would impact oil demand. The energy complex is aggressively lower with WTI off more than 7%, down 6.27 to 72.12, ULSD is more than 19 cents lower to 2.1902 while RBOB is more than 18 cents lower to 2.1361. Natural gas is taking a different approach and is near 20 cents higher as natural gas flow to LNG export facilities hit a record. Although much is yet to be know about what is expected to be called the “Nu” variant, such as how easily it spreads and vaccine efficacy rate, oil and equity market participants are selling first and asking questions later. This is either a great time to buy the dip, or it could be the start of a more aggressive sell-off. It is hard to know and depends on how the new variant evolves and its impact on demand. As such, an even position on your DPR is recommended until we get more clarity.
With current trade in nearby WTI at 72.22, the 100-day moving average has been broken which leaves the 200-day at 69.77 as next solid support.