Brent Crude just above major support

Crude is trying to fend off a third consecutive week of losses as the global demand side of the equation continues to put a dampener on prices. The International Energy Agency (IEA) report was fairly neutral with both supply and demand growth estimates increasing by 0.2 million barrels per day. But crude received a couple of blows midweek with a big jump in US crude and fuel stockpiles by a huge 7.9 million barrels for the week. The increase was made worse by inventories with the key storage hub of Cushing touching their highest levels since 2021.

Wednesday’s FOMC decision was marked by hawkish updates to its new dot plots and projections. These showed two more additional rate hikes this year and PCE core inflation considerably higher for this year. But markets are questioning this with three-plus months’ worth of data to come before the September FOMC meeting.

Interestingly, hot on the heels of analysts at US investment bank Goldman Sachs recently cutting their end of year 2023 forecasts to $85 from $95, JP Morgan has followed suit by slashing its prediction. Goldman analysts see higher supply from sanctioned oil exporters offsetting the recent OPEC+ and Saudi cuts amid potentially underwhelming demand.  JP Morgan forecasts Brent crude trading at $81 from the prior $90 by the end of December as it sees global supply growth offsetting a record rise in demand, while inventory build-up lowers the risk of price spikes. The 200-week simple moving average remains solid support at $70.91. Above here is strong daily support around past lows around $72. If markets can bounce, resistance resides at the 50-day moving average at $77.65.