Oil fell by over 2% to a low of $70.22 in the past hour

The drop is pared slightly now to $70.60 levels as buyers are clinging on to the 200-hour moving average (green line) for support:

WTI H1 20-09

The bounce higher over the past two weeks is being dealt a blow amid the souring risk sentiment to start the week and I wouldn't be one to underestimate the potential severity of any further drag in risk trades amid the whole China situation.

For now, oil buyers may be able to cling on to some support as pointed out above at $70.55 but a firm break below that outlines a fall towards testing $70.00 and then the 100-day moving average at $69.24 next.

There is some swing region support around $67.20-60 but I fear that broader contagion risks could easily exacerbate downside pressures in oil for the time being.

The general outlook for oil remains more bullish going into year-end amid as the market remains tight but that will play second fiddle to any overwhelming fears brought about from China contagion risks - the key focus in the market currently.