Despite the wave of rate hikes by major central banks this week, Brent oil is on course for a weekly gain on signs of tightening supplies and a further reopening of the Chinese economy.
Brent has now resurfaced above the psychologically-important $80/bbl line, attempting to post a second weekly gain in 3 weeks which has restored its year-to-date gains, now at more than 4%.
As drawn in last Friday’s oil chart, the $76/bbl line played a crucial role as a key support level, setting the base for Brent’s rebound.
In order for oil prices to extend their recent recovery:
- recession fears have to be allayed by convincing evidence that China’s post-pandemic recovery can get well and truly underway.
- markets must see signs that major central banks are closer to being done with their respective rate hikes, which suggests that the worst of the intended demand-destruction is over, may also help pare recent losses seen in oil benchmarks.
- And of course, tightening global supplies would be the icing on the cake for oil bulls, especially if OPEC+ invokes further supply interventions over the coming months while Russian output continues to be squeezed out of global markets.
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