Brent oil experienced contrasting fortunes across the two halves of 2022: concerns over scarcer supplies on the back of the Russia-Ukraine war then gave way to demand-side fears amid the global wave of monetary policy tightening.
Currently, Brent prices have revisited the $83/bbl region, having recently found support at its 21-day simple moving average (SMA). The $83/bbl region proved to be a key battleground between bulls and bears, having previously supported prices back in late September and late November.
Although Brent is mired firmly in its downtrend that began in mid-2022 and is set for back-to-back quarterly declines, it’s still managing to hold on comfortably to year-to-date gains which stand at about 7.7% at the time of writing.
As things stand, Brent oil is on course to registering its first consecutive annual gain since 2017.
The year ahead promises a stronger footing for Brent prices, provided that the expected demand rebound in the Chinese economy indeed materializes.
2023’s supply-side risks also point to an upside breakout of Brent’s 2H22 downtrend, especially with Russia threatening to make its supplies scarcer in response to western sanctions.
Still, the year ahead isn’t likely to be smooth sailing for this global oil benchmark, considering that the global economy may yet tip into recession in 2023.