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Expected OPEC+ output hike does little to dissuade oil bulls

Oil prices brushed aside the widely expected output hike decision by OPEC+ to remain on course for consecutive weekly gains, as Brent and WTI futures continue being guided higher by their respective 50-day moving averages.

Brent guided higher by 50-SMA

As the EU works towards a year-end ban on Russian oil, along with the US administration’s plans to refill its strategic reserves in the fall, such an outlook should translate into ample support for oil prices throughout 2022.

China’s adherence to its zero-Covid strategy may cap oil’s upside while lockdowns persist and weaken demand in the world’s second largest economy.

Still, oil should have little trouble keeping its head mostly above the psychologically-important $100/bbl mark, as long as demand-side concerns are eclipsed by supply deficit fears, barring a shocking ramp-up in output by OPEC+ heavyweights.

 

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