It has been a brutal week for oil markets.
The global commodity has weakened below $95 for the first time since Russia invaded Ukraine thanks to fears of an impending global recession. The latest GDP figures from China revealed that economic growth slowed sharply in Q2 as the economy struggled to shake of the impact of Covid restrictions. Oil benchmarks are still up over 25% since the start of 2022 but could surrender more gains due to the darkening demand outlook. This week alone, WTI has shed over 9% with Brent falling over 7.7%! An appreciating dollar has certainly added to the pressure and continues to fuel the downside momentum. While fears of a global recession could keep bulls at bay, oil prices remain pulled and tugged by conflicting forces. On one side off the bearish equation, there are recession fears and Covid-19 restrictions in China. However, bulls could draw support from ongoing geopolitical risks and tightening market conditions.
Looking at the technicals, Brent is under pressure on the daily charts. Sustained weakness below $95 could encourage a selloff towards $90 and $87, respectively.