Crude oil price began the new week on its front foot amid renewed hopes over the easing of China’s COVID-19 restrictions. Brent futures- the benchmark for global oil – hit an intraday high of $99.81 before easing to $98.01 as at the time of writing.
As highlighted by the Wall Street Journal, Chinese officials are considering reopening the economy after the stringent COVID-19 restrictive measures that have been in place for close to three years. Even so, they remain cautious as they weigh the cost of the zero-tolerance strategy against that of public health.
In recent weeks, there have been contradictory opinions over the likelihood of China easing their restrictions and what that would mean for crude oil price. The renewed hopes are founded on the fact that the country is the leading importer and second-largest consumer of crude oil in the world.
As such, eased COVID-19 restrictions may further tighten supplies and boost prices. This comes ahead of the EU’s embargo on Russia’s crude exports as from 5th December.
At the same time, a decline in the value of the US dollar has boosted crude oil price. As at the time of writing, the dollar index was at $110.14; its lowest level in close to two weeks. The easing of the greenback has made crude oil less expensive for buyers holding other currencies.
Crude oil price prediction
Brent oil moved closer to the psychologically crucial level of 100 earlier on Monday. Even so, the bulls lacked enough momentum to push the asset to the aforementioned level; which has been evasive since the beginning of September.
As shown on its daily chart, crude oil price was trading above the 25 and 50-day exponential moving averages. Besides, its relative strength index (RSI) is above the neutral level at 59. While these technical indicators point to further gains in the ensuing sessions, they will likely be curbed at the critical zone of 100. In fact, a move above that level will invalidate this thesis.
In particular, 99.81 is a resistance level worth watching in the short term. On the lower side, a move below the current support level of 97.44 will give the bears an opportunity to retest the lower support zone of 93.21.