Oil Corrects Below 110 USD

However, “China this year could surprise the market,” Yifan Hu, regional chief investment officer and head of Asia Pacific macroeconomics for UBS Global Wealth Management, said in a Bloomberg TV interview. 

“Monetary policy is quite relaxed, and the economy is recovering. So I think as long as there are no prolonged city-level lockdowns in the second half, we are positive for China’s market to continue to rally.”

If Chinese demand fully returns, fear of a global recession could be eased, possibly lifting crude prices again.

It looks like oil will retest the medium-term uptrend line, currently near 107 USD. If that level holds, the uptrend might continue. The resistance will likely be in the 115 USD zone and also near 123.50 USD.

The inability to post new cycle highs (instead, we saw a lower high) could confirm that the bull market is exhausted, possibly lowering crude prices.

In that case, bears might push the price back to the critical 100 USD threshold over the next few days. If oil drops to double digits, it might lead to a more significant (and longer) correction.