Crude oil price dropped by about 8% in the past week amid concerns that major economies would experience at least a mild recession. Besides, Friday’s US nonfarm payrolls data boosted the US dollar while making crude oil more expensive for buyers holding other currencies.
Fast forward to Monday, and Brent futures were up by 1.13% at $80.63 as at the time of writing. The rebound is largely due to the positive talks regarding China’s oil demand growth.
Fundamentals
During an interview on Sunday, the International Energy Agency (IEA) Executive Director, Fatih Birol indicated that China’s recovery remains a crucial driver of crude oil price. In fact, the agency forecasts that half of the global oil demand growth in 2023 will originate from China.
Notaby, JP Morgan is one of the experts with a similar prediction. As highlighted by the investment bank’s head of Asia energy & chemicals research, Parsley Ong, it expects oil growth in the country at 800,000 barrels per day (bpd) year-on-year. Subsequently, it expects crude oil price to hit $90 per barrel by the second half of the year.
Even with this bullish driver, high interest rates and recession concerns will likely continue to curb the asset’s gains. In the short term, investors are keen on Jerome Powell’s speech on Tuesday following the higher-than-expected US jobs data last week.
Brent crude oil price outlook
As seen on its weekly chart, Brent oil remains under pressure as the 25-day EMA remains below the medium term 50-day EMA. Indeed, I expect the trend to continue for a while longer as the crucial level of 90 remains evasive to the bulls.
In the short term, the range between 79 and 82 will be worth watching. Below the range’s lower level, the bulls will be keen on defending the support at 76.68. On the flip side, the probable rebound will likely remain below the 50-day EMA at 84.58.
