The oil price fell more than 4% today, as concern that a new wave of a pandemic will slow down economic recovery.
While stronger dollar weighing on prices, Angela Merkel says UK source of the virus will speed up the spreading and infected numbers. And now, ahead of Easter Holidays on Sunday, April 4, many European countries are announcing more lockdowns and limitations. "Continental Europe is tightening the coronavirus measures and thereby further restricting mobility," Commerzbank (DE: CBKG) said. Germany, the biggest economy of Europe, is extending its lockdown until April 18 and asked citizens to stay home, especially during Easter Holiday, to avoid the third wave faster spreading. Before Germany, the French also had an extended lockdown on Saturday after a sharp jump in COVID-19 cases. These actions together are supposed to have an adverse reaction in the market.
The market structure also used to be weaker, with the front-month Brent spread flipping into a slight “contango” for the first time since January 2020. Contango is where front-month contracts are cheaper than future months and could encourage investors to keep the Oil in storage. Physical demand for Oil also will be under pressure after following limitations.
Technical overview
In a Daily chart, price for the first time since November 2020 trading under 20 & 50 DMA. RSI at 42 and OBV downtrend line also supporting the trend.