WTI falls sharply approaching the 200-DMA, hovers around $70.35

• Crude oil prices fall during the day after rallying for six weeks, down in the day 2.82%.
• COVID-19 restrictions, and the spread of the omicron variant, dented market mood as oil demand decreased, dragging prices lower.
• WTI Price Forecast: In the near-term has a downward bias, though a break of the 200-DMA is needed so that WTI bears could target December 2 low at $62.34.

The US crude oil benchmark WTI falls during the New York session, trading at $70.34 at the time of writing. Concerns about COVID-19 restrictions and the omicron variant’s rapid spread dented investors’ mood and hit oil prices as lockdowns loom. That, alongside countries tapering some crude reserves, helped ease energy prices.

According to sources cited by Bloomberg, “the market is still in calibration mode around the virus.” At the beginning of the week, global equities and oil rallied, on the back that the newly discovered strain, although highly transmissible, caused mild symptoms. However, 19,842 new cases reported from South Africa on December 8 increased market participants’ worries, which flew through safe-haven assets as they waited for additional omicron information.

During the day, Western Texas Intermediate peaked above December 8 cycle high at $73.17, retreating towards the $70.50s area amid dented market sentiment. 
In the meantime, the US Dollar Index, which price influences commodities quoted in US dollars, is up 0.34%, sitting at 96.24, a headwind for WTI.

WTI Price Forecast: Technical outlook

WTI is approaching the 200-day moving average (DMA) at $70.06, which would be the first line of defense for oil bulls. Crude oil has a downward bias, as failure to break above the 100-DMA at $73.72 could push WTI towards a re-test of December 2 low at $62.34. If WTI bears reclaim the 200-DMA, the first support would be September 1 swing low at $67.01, followed by the aforementioned December 2 low.

To the upside, a bounce at the 200-DMA could push crude oil prices higher. The December 7 high at $72.81 would be the first supply zone, followed by the 100-DMA at $73.72.