Brent oil is headed for its first double-digit weekly loss since early August and has erased all of its year-to-date gains which once stood at nearly 80%.
The 11% plummet this week alone has been largely fueled by increasing concerns that global demand would deteriorate as central banks continue hiking interest rates across major economies, while ramping up recession risks along the way.
The OPEC+ decision to stand pat on its production levels, as opposed to triggering another supply cut, also eroded immediate support for oil prices.
With Brent now a far cry away from that early-March peak above $130, oil bulls are hoping that the mid-December 2021 resistance can turn support and help stem the recent declines.
If this mid-$70 support doesn’t hold, that could invite bears to send oil down into the mid$60 region.
In order to restore support for oil benchmarks, markets have to be shown meaningful signs that China is continuing to ease away from Covid-curbing measures. A further restoration of demand conditions in the world’s second largest economy should go some ways in stemming the recent declines in oil prices.