Brent is able to keep its head above the psychologically-important $100/bbl mark for the time being, despite having broken below notable support levels.
Brent’s 100-day simple moving average and the upward lower trendline since March both gave way earlier this week, as oil investors grew more doubtful about the resilience of global demand.
Despite the rosier outlook offered by Fed officials that policymakers can still engineer a ‘soft landing’, markets are still opining that the Fed rate hikes could ultimately result in a US recession which would erode demand for the commodity.
The dislocation between oil futures and tight physical market structures should be resolved once markets are more assured of the global demand outlook.
The longer benchmark prices can keep their heads above $100, the stronger the foundation for oil to rebuild its year-to-date gains.