Oil is in demand today for two big reasons:
- China is taking clear steps towards reopening. Xi today said China will continue to open up , there are reports on a plan to scrap covid flight suspensions and the former chief eipdemiologist at China's CDC said substantial changes will take place soon
- The G7 and Australia agreed to the long-rumored Russian oil price cap and it will have a hard cap
Obviously, global demand for oil is coming under pressure due to slow economies but that's counteracted with OPEC pumping less this month, SPR releases running off and the Russia news.
Keep in mind that this year's oil rally to $120 was on expectations of falling Russian oil exports due to the original sanctions and that never happened, leading to the drop to $80. Once again the market is creating expectations of exports falling and it could be the same kind of trap. At the same time, there are signs of Russian production flagging as sanctions bite.
Goldman Sachs was out with a note calling for $115 brent yesterday and it looks possible based on the chart. The downtrend broke last month and was successfully retested. The October high of $93.46 looms, followed by the 200-day moving average at $98.49.
