Crude oil price has largely found support in the heightened optimism regarding the reopening of the Chinese economy. Indeed, the crucial level of $80 remains a steady support zone. However, amid the recession concerns, $90 is still evasive to the bulls in the Brent oil market. A look at both the fundamentals and technicals signals the need to balance the China-driven sentiment with the reality that the rest of the world may experience some form of recession.

Crude oil price outlook
As has been the case in recent weeks, crude oil price movements have largely been pegged on demand-related factors as the supply side remains constant. In fact, analysts expect the current OPEC+ output policy to remain unchanged following the delegates meeting set for the coming week.
On the other hand, divergent drivers have continued to shape the crude oil demand dynamics. To begin with, China’s reopening after the stringent COVID-19 restrictions has heightened optimism over a surge in the commodity’s demand. The positive sentiment is founded on the fact that the Asian country is the second largest consumer of crude oil and the leading importer of the product worldwide.
Notably, the aforementioned driver is largely behind the bullish forecast by major analysts. For instance, Goldman Sachs sees crude oil price rallying to $100 per barrel by Q3’23. During a recent interview with Bloomberg, the investment bank’s Co-head of APAC natural resources and clean energy research, Nikhil Bhandari stated,
“the oil market is not prepared for any sequential demand growth because supply isn’t really growing this year…China reopening will drive from now until the year end, 1.6 million barrels per day demand growth in oil. For context, oil market is about 100 million barrels per day globally. And typically, demand in a normal economic environment grows 1 – 1.5 million barrels per day.”
Based on this thesis, China’s reopening and the subsequent rebounding of its oil demand by 1.6 million bpd till the end of the year is significant. On the lower side, the analyst expects OPEC’s control over the commodity’s supply to sustain the support of crude oil price at $80 per barrel.
Sentiment-driven crude oil market?
Similar to when Europe and the US eased its stringent COVID-19 restrictions, China’s reopening is expected to result in pent-up demand. From this perspective, the bullish outlook on crude oil price is justified. Besides, ahead of the EU’s ban on Russian oil products on 5th February, the Asian nation appears to be importing significant amount of crude oil to fill the gap.
Even so, it is important to balance the hype surrounding China’s reopening with the recession concerns from other major economies such as Europe and the US. As such, I expect crude oil price to remain subject to curbed gains in the short term even as the bulls remain in control.