Oil bulls kept in check by aggressive central banks

Brent oil has been resisted at its 50-day simple moving average this week, as major central banks made a big show of its aggressiveness in combatting inflation.

The larger-than-expected rate hikes out of the UK and Norway, coupled with the Federal Reserve insisting it has more rate hikes in store, has raised markets fears for a global recession.

Macro woes still abound, overshadowing the encouraging signs surrounding US consumption, with crude stockpiles falling while demand for oil products supplied and jet fuel have risen.

The US dollar’s resilience of late has also added to the headwinds for oil prices.

This global benchmark for oil prices is set to register a weekly loss of about 4% - its largest since the week ending May 5^th.

 

Still, Brent oil appears rangebound, with strong support set to arrive around the $71.50 mark which had previously rebuffed oil bears on several occasions since early May.

Although the thought of further Saudi supply cuts may shore up support for Brent, the upside for oil benchmarks should remain capped until markets can get over the recession fears.