Market reviews

Oil is heading for a hefty weekly loss of more than 7% as fears intensified over the gloomy demand outlook for crude markets.

Brent oil has seen several catalysts for gains ahead of the weekend, ranging from the prospects of a less-aggressive Fed to China’s reduction of the required quarantine period for inbound travelers.

Brent futures are climbing on hopes that China is moving towards finally easing up on Covid restrictions and alleviate demand conditions in the world’s largest crude importer.

Brent is about to register consecutive weekly gains for the first time since July, despite the risk-off mode sweeping through global markets and the US dollar’s recovery heading into the weekend.

Oil prices swung between losses and gains this week as concerns over a global economic slowdown clashed with caution over tightening supply.

The Crude Oil market on the D1 time frame was in an extended downward move until 26 September when a lower bottom was recorded at 76.13.

Oil has been given a boost after the OPEC+ decision to lower output by 2 million bpd in November. Brent oil is currently trading back above its 50-day simple moving average (SMA) for the first time in over a month, holding on to most of its gains since last week.

Oil prices have drawn some respite from the US dollar’s pullback this week, even though global recession risks still weigh on the commodity’s outlook.

Oil benchmarks are slipping into the weekend as the US dollar continues pushing higher following the Fed’s recent overt signal to keep pressing on with its aggressive fight against inflation.

If the Fed triggers a gargantuan 100bps hike next week, or signals to the markets that the 4.5% peak for the ongoing rate hike cycle is inadequate to tame stubbornly elevated inflation, that may well translate into Brent revisiting its recent cycle low around $87/bbl.

Brent oil is trying to claw its way back above the psychologically-important $90/bbl level, even as it continues to trade around its lowest levels since February. Oil bears took their cues from the “death cross” that formed earlier this week, with the ensuing losses lending credence to such a bearish technical signal.

Brent is attempting to hold steady, having plunged back below the psychologically-important $100/bbl mark this week and trading below its 200-day simple moving average (SMA) once more.

Oil prices have been given a lift at the prospects of OPEC+ supply cuts in a bid to offer stability to markets. Brent oil has been restored to levels around the psychologically-important $100/bbl line, though remains capped by its 50-day simple moving average for the time being.

Concerns over an economic slowdown inspired oil bears this week.