Crude: Oil prices move in bear territory!

It looks like the "Putin trade" is back on: A few moments ago. stocks, which had rallied sharply, came off their earlier highs, while oil and gold both bounced off their lows... on this:
 

*PUTIN: KYIV NOT SERIOUS TO FIND MUTUALLY ACCEPTABLE SOLUTION
 

Whether or not we will see some traction now remans to be seen. But after slumping more than 20% off last week’s highs, crude oil has entered the bear market territory. Will it now rebound?


Source: ThinkMarkets and TradingView.com

Today saw Brent prices collapse further, dipping below the $100 per barrel level, to reach a low so far of around $97.50. WTI has likewise fallen sharply to $94.50. Last week, these contracts were trading at highs of around $138 and $129, respectively.

The collapse has been spectacular.

I think the biggest driver behind the sell-off in oil has been this: investor realisation that Europe is not going to wean off Russian oil supply immediately. Everything else is secondary, including the potential return of Iranian oil supply. Meanwhile, the OPEC has highlighted the risk to the oil demand outlook arising from the Ukraine war and surging inflation. 

Also weighing on oil prices is something that had sent prices into the negative last year: surging covid cases and lockdowns. This time, in China, the biggest oil importer in the world. Here, covid cases have spiked sharply, and very sharply in certain regions. Consequently, the government has put tens of millions of people in lockdown. The most important regions are the entire Jilin province and technology hub Shenzhen.

The lockdowns have also weighed heavily on the Chinese yuan. Speaking of which, a report from WSJ says talks over pricing oil in yuan have accelerated as Saudis "have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom."

Given the sharp sell-off in oil prices, I would imagine we will see a bit of “bargain” hunting at these levels, especially as the threat of Russian supply disruptions remain high. But we need to see evidence of a rebound first, ideally on a daily closing basis, before bullish speculators start to dip their toes in.