Brent oil is now in the green heading into the weekend, attempting to resurface above the psychologically-important $120/bbl mark.
Despite finding support at its 21-day moving average, Friday’s advance may not be enough stop Brent’s first weekly decline since mid-May.
Markets are wary that the Fed’s ultra-hawkish stance, having already triggered a super-sized 75bps hike this week, would hasten the demand destruction that could ultimately unwind more of oil’s stellar gains.
Yet overall, considering the persistent supply constraints and tighter market conditions, the supportive environment for oil prices is set to persist going into 2023.
Brent and US crude prices are unlikely to stray far from the psychologically-important $120/bbl mark, and should remain well supported by their respective 50-day simple moving averages over the near-term.
Oil prices may even carve out more near-term gains provided China continues shedding its virus-curbing measures, while signs of demand destruction in major economies are kept at bay.