WTI oil: oil prices attempt a rebound

Risks appear to be on the upside for oil prices

Oil prices have been rising since Friday thanks to investors’ renewed appetite for risk, which has benefited all risky and cyclical assets. The price of a barrel of WTI rebounded more than 4% on Friday, thus returning above its support sunk two days earlier at $85.

Oil prices are trying to regain momentum in the short term, but could remain under pressure in the coming weeks due to fears about the economic slowdown. Indeed, between massive monetary tightening by central banks and Beijing’s “zero covid” policy, global demand could continue to weaken.

That said, a fall in oil prices seems unlikely in the short term. Oil prices have already corrected sharply from June highs (-30%), which means that fears of a slowdown have already been strongly priced in, and supply remains particularly constrained with the embargo on hydrocarbons Russia and the production difficulties of OPEC+ and the United States.

The risks even seem to be on the upside. Treasury Secretary Janet Yellen has warned that a sharp rise in oil prices is possible this winter with the implementation of the European embargo on Russian oil. In addition, Vladimir Putin indicated this weekend that Russia will cease its hydrocarbon exports with all countries putting in place a cap on Russian hydrocarbons (G7 countries for the moment). Finally, the Iranian nuclear deal finally seems to have collapsed and OPEC+ seems ready to reduce its production if necessary.

WTI Oil Price Daily Chart – Key Levels

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