WTI jumps 5% to recapture 200-DMA after Omicron covid-led crash

• WTI sees a dead cat bounce on Monday after Friday’s collapse.
• Traders hope that OPEC+ may pause oil output hike amid Omicron covid woes.
• Bearish crossover on the 1D chart suggests that the downside remains in play.

WTI (NYMEX futures) is attempting a solid comeback from Friday’s massive collapse to two-month lows of $67.31.

At the time of writing, the US oil is up about 5% on the day, consolidating the recovery at around $71. The rebound ran into stiff offers at the $72 mark, triggering a pullback in the price over the last hour.

WTI is trying to find its feet this Monday, as markets remain hopeful that OPEC and its allies (OPEC+) will pause its planned oil output increases, in the wake of the new Omicron covid variant-led uncertainty.

On Friday, the black gold tumbled nearly $10, in a massive sell-off that got triggered by the new covid strain cases in South Africa. Rising cases of the variant globally combined with its impending risks to the global economic recovery and chances of lockdowns worldwide dented the sentiment around the high-beta assets, including oil.

The Thanksgiving holiday break-induced thin market conditions exacerbated the pain in the US oil. Looking ahead, the covid updates and OPEC+ headlines will continue to have a significant bearing on WTI price.

From a short-term technical perspective, WTI has recaptured the 200-Daily Moving Average (DMA) resistance at $69.75 on its road to recovery.

It remains to be seen if the price can yield a daily closing above the latter amid a bear cross in play. The 21-DMA has breached the 50-DMA from above, flashing a bearish signal.

The 14-day Relative Strength Index (RSI) continues to trade below the midline, despite the latest uptick, adding credence to the bearish view.

On the upside, the horizontal 100-DMA at $73.95 is the level to beat for gold bulls. Meanwhile, the $70 mark could contain the selling resurgence, below which Friday’s low will be retested.

WTI: Daily chart