Economic Outlook on Oil

Oil has been ranging in between $108 and $113, with consistent resistance at $111, which we have added as a new technical level. The value area has consolidated immensely, which suggests that we may be preparing for a breakout. There is no fundamental reason yet why we should see significantly lower oil prices, though China's renewed Covid lock downs weigh on demand. We anticipate strong support from $108 and $106, with $100 an absolute floor. If we can break past $113, our next target is $116.