Slippery outlook for crude oil amid macro woes, but bulls can still hope

A GRIM outlook for the global economy will likely keep oil bulls in check, particularly in the first half of next year. Yet, tight supply from the dislocation of Russian oil, potential output cuts by the oil cartel and the much-anticipated China reopening could invigorate the commodity’s prices.

Also, inflation – one of the biggest headline grabbers in 2022 – is expected to soften next year. If this happens, central banks could take their foots off their aggressive rate hike pedals. This, in turn, would be good news for the global economy and would also augur well for crude oil.

Most pundits do not expect crude prices to fall off the cliff next year or scale 2022’s red-hot levels, which were led by Russia’s invasion of Ukraine. There is consensus that the reopening of China, the world’s largest oil importer, after a prolonged period of strict zero-Covid policies, would be one of the biggest swing factors for crude.