Crude prices got a boost from a cool inflation report that supports the case that the US economy could still have a soft landing. The oil market can’t justify prices below the $70 level even if bumpy times are ahead. Disruptions from the Keystone Pipeline remind us how tight the oil market remains. China will struggle to deliver a complete reopening until early next year, but that demand outlook should start to improve soon.
The OPEC monthly report noted that, “The year 2023 is expected to remain surrounded by many uncertainties, mandating vigilance and caution.” OPEC doesn’t have a crystal ball for China’s demand outlook and they will try to be nimble until their reopening is clearly headed in the right direction.
Oil’s downtrend has been in place since early June and that should come to an end over the next month or two, as the world’s two largest economies should have improving crude demand outlooks.
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