The surprise contraction in Europe’s manufacturing sector has ramped up fears of an economic recession. Ongoing rate hikes by central bankers worldwide, with the ECB finally following suit this week, are also set to hasten the demand erosion.
Despite such darkening prospects, Brent prices are holding their nerve around the psychologically-important $100/bbl handle.
Looking at the charts, this global benchmark for oil has formed a downtrend since June, posting a series of lower highs and lower lows.
However, the still-tight market structures are expected to limit oil’s near-term downside, with traders eyeing the 200-day simple moving average for support, as they discovered last week.