WTI bears take back the reins, Fibonacci targets in focus

• Oil prices have been capped as covid spreads and vaccine hopes dwindle.  
• US equities on the back foot as risk appetite fades, but bulls cling to OPEC hopes.

WTI has been on the backfoot since topping-out in the $43 area and is well on its way to completing a 38.2% Fibonacci retracement level of the daily impulse. More on this below.  

Meanwhile, from a fundamental standpoint, the correction  was initiated by dwindling sentiment in the prospects of how complete of a solution the first coronavirus vaccine can be.

The continuing rise in Covid cases has been weighing  on risk sentiment, despite the welcomed news if Pfizer Inc.’s Covid-19 vaccine.

The vaccine is on  track to be authorized as early as next month, but there are still many logistical challenges in getting enough of the global population vaccinated.

The  US covid outbreak is uncontrolled throughout all states.

This has caused  a snapback in investment preferences on Wall Street and a rotation from economic growth  stocks  back into the stay-at-home choices again.

Today, the S&P 500  is heading into the final 15  minutes of trade  down over 1.45% which brings in the 6th Nov lows to focus:

Meanwhile, the  IEA poured cold water on the bid mid-week with a  reduction of demand expectations for this quarter and the first quarter of 2021.

However, analysts at TD Securities explained that  the latest news from OPEC+ suggested that  the cartel is considering both a potential 3-6 month delay of the tapering and a potential ‘tweaking’ of the cuts.

”In this context, OPEC+ still holds the key to support the market in the immediate term, while the prospect of a vaccine and further stimulus offer hope on the demand front, ultimately keeping the Great Rebalancing underway,” the analysts said.  

”When combined with overly negative sentiment, OPEC+ support and rising demand expectations “” particularly in the context of a potential vaccine “” we see some room for the rally in energy prices to run in the near-term.”

WTI technical analysis

From a technical standpoint, there are two critical levels that can be noted on the daily chart from where bulls will likely step aside until bears have had their way for the meantime.