Daily Energy Research

Global equity index's saw a fourth day of downside on Monday as country's prepare for deeper lockdowns. The recent rally in energy prices is linked to hopes that demand growth will bounce back in 2021 due to distribution of a vaccine.

"The reality is that we're seeing tighter lockdowns in Europe and now there's potential for lockdowns in New York" said Andrew Lebow senior partner at Commodities Research Group. Tighter lockdowns coupled with weaker demand from India is a reminder that full demand bounce back may be bumpier than the market anticipated.

Technically, Oil is overbought and upside price momentum is stalling around $47.50. Given the strong rally in November I think profit taking is likely at current levels or at least a consolidation. Reward to risk ratio's favour short sellers.

But let's not forget that the underlying fundamentals paint a rosy picture for energy markets headed into 1Q2021. Mass vaccinations will enable economies to reopen and global trade to bounce back, increasing the demand for energy. While if a US Stimulus package can be agreed on, should also feed through into a bounce back in global demand. So while Oil looks likely to retrace a portion of November's up swing in the short term, medium term I'd be looking to "Buy the dip" towards $45 daily support area.