After trading just below $125/bbl in early June, Brent crude oil fell more than 10% to $110/bbl. Strategists at ANZ Bank see solid support at the $100 level.

Oil well-positioned to withstand an economic slowdown

“Previous recessions have seen oil demand fall by 0-3% (peak to trough), but that would still not be enough to offset the supply-side disruptions.”

“For the moment, oil demand is improving. Traffic numbers remain strong despite high prices in Europe and the US. Congestion is also rising in China as restrictions ease. Combined with ongoing supply-side issues, we expect inventories to continue to fall in 2023. This should support upside moves.”

“We see support for oil at $100/bbl under a typical global recession. That would fall to $80/bbl in the unlikely event of global demand falling by 5%, as inventories would build to cover around nine days of consumption.”