Crude oil price: China’s reopening will remain the major driver in coming weeks

Crude oil price has been finding support in the hopes over China’s reopening. Even so, gains will likely remained curbed in coming weeks with the probable increase in COVID-19 cases. Besides, as investors shift their focus to the festivities, the oil market will likely experience low volatility in the ensuing sessions.

Analysts’ crude oil price outlook for 2023

In recent months, concerns over the status of Chinese crude oil demand has been one of the bearish drivers in the market. This is founded on the fact that the Asian country is the second largest consumer of the product after the US, and the leading importer in the world.  

According to Energy Aspects’ Amrita Sen, China’s reopening will remain the major driver of crude oil price into the coming year. In a recent interview, the analyst was optimistic that the easing of stringent COVID-19 restrictions would boost Brent futures to $100 per barrel.

In the short term, the commodity is likely to find support in the heightened mobility during the Chinese New Year holiday. Even so, Sen acknowledged that the predicted bullish path will not be without bumps. In particular, COVID-19 cases may increase following the easing of the restrictions and the extensive holidays in January. From this perspective, it may take a few months for crude oil price to retest the once steady support zone of $100.   

Brent crude oil price forecast

As the year comes to an end, investors appear reluctant to place huge bets on various assets within the broader financial market. As such, I expect crude oil price to remain range-bound in the ensuing sessions; a trend observable in other assets.

Even so, it will likely remain under pressure into the next year uncertainties shape the market. With regards to the major technical indicators, Brent oil was trading below the 25 and 50-day exponential moving averages. Besides, the RSI of 45 places it slightly below the neutral level of 50.

In the ensuing sessions, the range between 77.05 and 81.00 will be worth watching. However, heightened hopes over Chinese demand over the country’s New Year may boost crude oil price to the upper resistance level of 82.35. On the lower side, I expect 77.05 to remain a steady support zone for Brent futures in the short term.

crude oil price
crude oil price

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