Oil bearish breakout of $80/bbl on Wednesday met little resistance and todayprices continue to decline amid signals of looming increase of supply thanks tothe efforts of large oil consumers. China has backed the US proposal to selloil from its strategic reserve, which, given the moderation of signals from thedemand side, could become a tipping point in the medium-term oil rally. Twonear-term levels where oil could find meaningful support are the previous high($75-76/bbl zone) and 50-day SMA ($ 74/bbl):

It is worth noting that the OPEC in its latest forecast pointed at the riskof market entering the state of oversupply as early as next month. The IEA saidthat continuing recovery in production will gradually diminish bullish effectson prices from lack of inventories. That is, negative signals are beginning toaccumulate as well on the demand side.

The magnitude of bearish impact from the news about strategic oil reserves releasewill depend on the exact figures of additional supply coming to the market.Information about them will soon appear on the Chinese organization's website.

The dollar met strong resistance after the US currency index hit 96 pointson Wednesday. EURUSD is recovering after Lagarde's comments that the ECB isunlikely to raise rates in 2022. Technically, the dollar's decline can be seenas a profit-taking move after a rapid rise (RSI on the daily timeframe topped70 points for the first time since June), as well as reaching the upper boundof the major uptrend channel. The two main support levels for bearish pullbacksare 95.40 and 95.00 levels:

Three Fed officials will speak today - Williams, Evans and Daly. The dollarcould react to their comments, especially if they help clarify the Fed's stanceon the recent acceleration in inflation. If officials speak out in favor ofaccelerating the curtailment of stimulus measures, the dollar may resumegrowth, but on the horizon of 1-2 months the level of 96 looks like a reliableresistance, as seasonal factors will start playing against the dollar inDecember. It follows from this that selling the dollar on rally attempts looksreasonable.