The Covid-19 situation in China has been a drag on oil prices during this month, as cases have been on the rise, while authorities recently reported the first related deaths in a long time. On Sunday, there were 3,748 locally transmitted confirmed cases (100 more from Sunday), while altogether 36,304 new local asymptomatic carriers were detected (up from 35,858 a day earlier). 
Despite some easing in the quarantine times, authorities remain committed to the zero-Covid strategy, which leads to strict lockdowns and sparked protest over the weekend. The increasing cases may make this aggressive strategy hard to maintain, but also make abandoning it difficult.
These developments in the world's second largest consumer of oil, intensified fears over demand - not long after both OPEC and IEA lowered their 2023 outlook in their latest monthly reports ,  - with prices taking another dive today.
USOil comes from three losing week and opens the current one with fresh 2022 lows, as we had warned from our last analysis, heading towards its worst month of the year. This creates risk for a breach of the 200Weeks EMA (at 71.50-72.00), but we are still cautious about sustained weakness below this level, with the next support at 67.11-00.
OPEC+ had showed their resolve to support oil prices with their 2 million barrels/day production cut announced in early October. Furthermore, Saudi Arabia sent another message last week and ahead of the December 4 meeting, with the rejection of a Wall Street Journal report that the group was looking to increase its output.
On the technical front, the Relative Strength Index (RSI) moves to oversold territory, which can help contain the decline, along with the 200Weeks EMA. As such, a reaction higher would be reasonable, although a catalyst would be likely needed for daily closes above the descending trendline form the month's highs (at around 80.50) that would bring the EMA200 back in the spotlight (mid-84.00s).
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 28 Nov 2022 https://www.opec.org/opec_web/en/publications/338.htm
Retrieved 04 Feb 2023 https://www.iea.org/reports/oil-market-report-november-2022