• Better economic prospects buoy oil
• Downside risks remain as central bankers push back
• Brent testing key resistance

Oil prices are recovering a little but remain broadly under pressure after falling 20% over two months from the middle of October.

There’s still a lot of uncertainty and debate around the demand outlook for next year and it would appear the prospect of many rate cuts has boosted the odds of a softer landing which could support demand and may have done the same to the price in recent days.

But there are clearly risks to that, not least that markets may have become overly optimistic about cuts next year. Then there’s also the risk that past cuts could have an even more dampening impact on the global economy or that OPEC+ compliance is as weak as the deal indicated it could be.

There are of course upside risks too, that demand and the economy outperform as they have this year which much lower interest rates could support.

[embedded content]

Brent recedes from Fib zone

Brent rallied earlier in the session but has since pulled off its highs which fell between the 50% and 61.8% Fibonacci retracement levels.

Brent Daily

Source – OANDA

This also falls around an important area of support and resistance over the last six months or so, further reinforcing it as an important zone now.

While the first attempt has failed, there doesn’t appear to be a shortage of momentum at this point so it will be interesting to see whether there’s another run at it.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at [email protected]. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.