Crude oil price extended gains from the previous session even after it appears set to record its first weekly loss over a span of four weeks. As at the time of writing, Brent futures- the benchmark for global oil – was up by 2.31% at $95.40.
The coronavirus pandemic in China remains one of the key drivers of crude oil price. This is founded on the fact that the Asian country is the leading importer of the asset and second largest consumer after the US. As such, rising COVID-19 cases and stringent measures from the government have traders concerned over oil demand in the region.
The Chinese administration has slightly eased on its COVID restrictions; which explains the crude oil price gains recorded on Friday. However, the move has not attracted enough buyers to push the asset to and past the crucial level of $100 per barrel.
Demand concerns remain as COVID-19 cases in China continue to rise. For instance, the cities of Guangzhou, Beijing, and Zhengzhou have seen record numbers. On Thursday, the country recorded over 10,500 new cases; the largest daily figure since April when Shanghai went into lockdown.
At the same time, a weaker US dollar made crude oil less expensive for buyers holding other currencies. This comes after the milder-than-expected US CPI numbers. The figures heightened hopes that the Fed will taper interest rate hikes in coming months. Such an environment would increase the chanced of a soft landing for the US economy.
Crude oil price prediction
As seen on its daily chart, Brent oil is trading above the 25 and 50-day exponential moving averages. Even so, the bears remain in control for as long as the crude oil price remains under the psychologically crucial level of 100 per barrel.
In the short term , the range between 92.29 and 97.52 will be worth watching. Even with further rebounding, I expect Brent oil to remain below 100 as the bulls lack enough momentum to break the resistance at 99.86. On the lower side, it may continue to find support at 90.85.