Brent Crude heading to $80?

Given the optimism over China re-opening, oil is not doing great at all. Brent looks like it is heading to $80 a barrel from here.

The latest weakness of course has a lot to do with the OPEC+ deciding against even steeper output cuts than those agreed in October. At the weekend, the group agreed to stick to its oil output targets.

In October, the OPEC+ had agreed to cut output by 2 million barrels per day (bpd), or about 2% of world demand, from November until the end of 2023.

The impact of a slowing Chinese economy on demand has hurt prices. There's also uncertainty about what the G7's price cap on Russian oil will mean for global supply.

For now, all the uncertainty is weighing on oil prices. Given the breakdown of several support levels in recent days, a move to $80 looks increasingly likely next. But there's the potential for an even deeper falls if recession concerns intensify. That said, the downside should be limited thanks to the OPEC+ intervention, and the group's threat to cut more if required.

By Fawad Razaqzada.