Oil up 0.7% on the day to $70.70

Oil D1 22-07

If there was a convincing argument that the sizable move on Monday for oil (and to some extent the loonie) was a squeeze, the chart is certainly saying so.

The drop at the start of the week was a big one and took oil towards testing key technical levels in the form of the trendline support from March to May and also the 100-day moving average (red line). Both levels held.

And we're seeing a stronger bounce in oil now as risk sentiment also picks up over the past few days, with price moving back to the 50.0 retracement level of the recent swing move lower after topping near $77. That level is @ $71.03.

That poses some short-term resistance before getting to $72 but the technical rebound here is one that continues to support the argument that dip buyers are still well in charge when looking at oil in the context of this year.

As mentioned time and time before this, the fundamentals for oil are still solid and the OPEC+ deal hardly changes that. If anything, OPEC+ still sticking as a pact for a longer period and gradually reducing output cuts is a good thing for oil prices.

Note, key word there being gradually, and not output cuts.

That ensures that supply conditions won't flood the market in one go and matches up with growing demand conditions as the world recovers from the pandemic.