The price of crude oil plummeted last week after Russia proposed an increase in production at the last OPEC+ meeting, which took place on Thursday. The plunge was further bolstered by the fact that the recent fears concerning the energy crisis in Europe, which kept energy demand high for some time, have now mostly subsided.
And while the risk of global supply and demand disruptions continues to pose a significant threat to the tentative recovery, not even the Omicron scare was enough to offset crude's temporary selloff.
The price action is currently consolidating around the 65.00 mark, which represents a major Fibonacci threshold of the rally that ensued from last year's crunch to $0.00 per barrel. This is where the new downtrend is most likely to be checked by bulls, at least temporarily, resulting in a pullback.
Under these conditions, bulls may attempt to utilise contrarian trading strategies in a bid to catch such a potential pullback. In contrast, bears would be on the lookout for openings in the correction where they could implement trend continuation trading strategies.
The most likely catalyst for any directional price swings this week will be the U.S. inflation numbers for November, which are scheduled for publication on Friday. That is why both bulls and bears should be mindful of potential adverse fluctuations towards the end of this week's session.
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