Brent has faltered back into sub-$80/bbl levels as markets unwind the geopolitical risk premiums from benchmark oil prices.
Markets are noting the positive developments surrounding a potential ceasefire in the Israel-Hamas war, which could dilute supply-side risks.
Despite OPEC+ sticking to its lowered output levels for this quarter, bullish sentiment may have also been further eroded this week after Fed Chair Jerome Powell said that a March rate cut appears unlikely.
At the time of writing, oil prices are testing technical support around its 21-day and 50-day simple moving averages (SMA).
Additional support can also be drawn from the rising trendline from that December 13th, 2023 intraday low of $72.33.
A sustained recovery in oil benchmarks would require :
- steeper OPEC+ production cuts
- evidence of more policy support for the US and Chinese economy
- another escalation in the ongoing tensions in the Middle East
However, if the bullish catalysts listed above fail to progress, then Brent may be forced to keep languishing in sub-$80/bbl waters in the interim.
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