Technical pullback unwinds Brent’s OPEC+ boost

Shortly after the OPEC+ shocker earlier this month, we published this article on April 4^th, bearing this title: “Brent due for technical pullback after OPEC+ shocker?”

That technical pullback finally played out this week, unwinding all of oil’s gains from the surprise OPEC+ decision to lower its output by over 1 million barrels per day (bpd) starting next month.

Despite the better-than-expected China GDP prints at the onset of the week and the latest drawdown in US stockpiles, this global commodity was still weighed down by demand-side fears which were only stoked by the Fed’s Beige Book which pointed to stalling US economic momentum.

At the time of writing, Brent is attempting to rebound after dropping close to the psychologically-important $80/bbl mark.

However, Brent it remains below its 50-day and 100-day simple moving averages (SMA) and is on course for its first weekly drop in five weeks, while sticking to the downtrend that began in Q1 2022.

Perhaps more importantly for OPEC+, this global oil benchmark is still back within that $80-$90/bbl range that Brent had previously adhered to in the months prior to the SVB/Credit Suisse crisis.

Even though the incoming OPEC+ production cuts are set to support Brent prices within this $80-$90/bbl range, oil bulls must also overcome concerns over a global recession in order to fulfill forecasts for $100 later this year.