The Netherlands Re-enters Lockdown
December 20, 2021
The market is selling off hard this morning as Omicron fears push prices lower. The Omicron variant was discovered about a month ago and has already been reported in 89 countries. This rapidly spreading variant has caused The Netherlands to go on lockdown and several other European countries are considering the same type of move. All of this is currently not seen as good news for the market.
The Baker Hughes Rig Count for oil rigs was up 4 to a total of 475 rigs. Last year at this time there were 263 oil rigs, and the 5-year average is 761 oil rigs.
Thursday the market rallied up strong on the Fed news and the DOE inventory report. Friday the market sold off and gave back all of the gains on the concerns that Omicron is going to impact demand. Energy markets closed weak, and it looks like they will test lower to start this shortened trading week.
Technically this market is correcting the entire rally from the COVID lows in April to the recent October highs. The move lower so far doesn’t appear to be enough of a correction of this entire advance which has been very impressive. Technical traders are looking at lower support levels to see if this market can test those levels. One of the issues for traders is that there are still a lot of bulls in the market and those need to be cleaned out to offer a longer-term rally next year. This is normally a factor that drives the market into yearend so we will have to see how this year progresses.
OPEC+ plans to meet on January 4th to discuss raising output for February unless they feel that a special meeting is needed. OPEC+ compliance for the month of November to their quotas was up marginally to 117%.