Crude has had a bumpy year so far as traders juggle concerns over a global economic slowdown and optimism around China’s long-awaited demand rebound. Inflation accelerated last month, raising the question as to whether the Federal Reserve would feel pressure to raise rates at its meeting next week despite ongoing financial turmoil. Meanwhile, crude supplies are expected to remain in surplus until demand takes off. The International Energy Agency releases its snapshot on the outlook for supply and demand on Wednesday.

Traders will be watching price action to see if the flat price is supported at recent lows.

“If buyers don’t show up soon and support oil at $70, we can see an air pocket lower to $62,” said Jc O’Hara, the chief technical strategist at Roth Mkm.

Eoin Treacy's view

The energy sector was the best performer for two years in a row and many investors pinned their hopes for 2023 on that continuing. The temptation in analysing the oil market is to think demand is a constant because more often than not it is the less volatile metric and grows at a predictable rate year over year. The challenge comes when the global economy slows down because demand can fall and that quickly creates a supply glut.


It's true that investment in new supply has been lacklustre over the last few years. All other factors being equal, that will support prices when demand recoveries. Brent crude has been ranging in a tight triangular pattern for the six four months and broke lower yesterday. It followed through on the downside today. The benefit of the doubt can be given to the downside in the absence of a clear upward dynamic.