Crude oil in buoyant mood Crude oil in buoyant mood Crude oil in buoyant mood

Crude oil in buoyant mood

Ole Hansen

Head of Commodity Strategy

Summary:  Crude oil’s recent recovery has been gathering some added momentum this week, first on signs Saudi production and Russian export cuts have started to tighten the market. The market then received another boost on Wednesday after lower-than-expected US inflation raised optimism the US rate-hike cycle may be nearing an end. Having broken resistance-now-support at $78.50 the short-term technical outlook for Brent has improved, and it could take it towards the 200-day moving average and resistance around $82.50-83.00

Today's Saxo Market Call podcast
Global Market Quick Take: Europe

Crude oil’s recent recovery has been gathering some added momentum this week, first on signs Saudi production and Russian export cuts have started to tighten the market. The market then received another boost on Wednesday after lower-than-expected US inflation raised optimism the US rate-hike cycle may be nearing an end, thereby reducing the risk to demand from a potential recession. In addition, China’s import of crude oil reached the second highest level on record last month, a sign of strategic stock building and robust demand from refiners as they used their government distributed quotas. While it may somewhat disguise some weakness in domestic demand, it nevertheless removes barrels from the market, thereby supporting a move to a tighter market. 

Brent crude trades back above $80 and WTI above $75, both for the first time since early May, and the positive momentum it has created is currently providing support with funds being forced to reduce bearish oil bets originally entered into as a hedge against an economic slowdown. The combined net long in Brent and WTI held by managed money accounts in the latest reporting week to July 3 was 280k contracts and near the lowest belief in higher prices in more than ten years. 

In Saxo’s recently published Q3-23 Outlook titled “AI, The good, the bad, and the bubble” I wrote the following about the outlook for crude oil: 

WTI and Brent crude oil’s sideway trading action since May looks set to continue into the third quarter with global economic growth concerns continuing to be offset by the willingness of key OPEC+ members to sacrifice revenues and market share to support the price. Overall, we believe prices are near a cycle low, but a few more challenging months cannot be ruled out, primarily because of worries that a robust pickup in demand, as forecast by OPEC and the IEA, will fail to materialise. The latter is potentially the reason why Saudi Arabia took the unprecedented step of announcing a unilateral production cut shortly after the group announced production cutbacks.

It all adds up to what could become a challenging few months for OPEC, especially if demand should fail to recover with Saudi Arabia, then raising the pressure on other producers to curb production. For now, the de facto leader of OPEC has managed to send a signal of support which may help prevent a deeper correction, while an eventual recovery, which we believe will occur, paves the way for higher prices.

Until then, Brent will likely remain stuck in the $70’s before, towards the end of the quarter, eventually breaking back above to the psychologically important $80 level, thereby shifting the current 70-80 range higher by 5-10 dollars, where it will be trading ahead of year-end.

Technical update on Brent: Having broken resistance-now-support at $78.50 the short-term technical outlook has improved, and it could take it towards the 200-day moving average and resistance around $82.50-83.00. A close above $83 could see it target $87-88 next. Source: Saxo

Production cuts and the general improved risk sentiment seems to have brought forward a return to the $80’s in Brent, and depending on incoming economic data we may see an attempt to move higher, potentially towards the upper end of the mentioned range that has prevailed since the beginning of the year.

Monthly oil market reports from the EIA, IEA and OPEC still point to a solid non-OECD driven recovery in global demand during the second half, and together with the mentioned production cuts, a price supportive market tightness looks increasingly likely in the coming months. However, with OPEC spare capacity from key Middle East producers running above six million barrels per day, we do not see the risk of a runaway rally, as producers are anxious to optimize revenues and production in the coming years before the energy transition eventually lowers global demand. Also, the current fragility of the global economy -on clear display in the latest trade date from China which showed overall exports slumping 12.4% YoY to a three-year low, may also limit crude oil’s advance.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.