Prices Higher Again Last Week, Market Outlook Supportive

Oil prices rose 0.6% on Friday to be up about 1.5% over the week, despite the USD index rising 0.6% following stronger US consumer confidence and a jump in inflation expectations. Brent is now trading around $86.40/bbl and WTI $82.56.

• Oil continues to trade above the 200-day moving average and close to the April highs. WTI reached a high on Friday of $83.12, which was below key resistance of $83.53, the January 23 high. It is well clear of support at $79, the April 3 low. Brent’s intraday high was $86.87, also below resistance at $87.49, the April 12 high. Support is at $83.50.
• Supply issues are likely to continue supporting prices, after the IEA warned that increased demand from China and developing countries is likely to exceed production in H2 2023, while OPEC said in its monthly report that the market is likely to be significantly undersupplied. However, the US’ EIA expects oversupply this year and next. The IEA also cautioned that OPEC+’s planned output cut from May is likely to feed through to higher prices for consumers.
• The prompt spread continues to show a tightening market.