This week, market sentiment started to improve as concerns about the banking system began to ease, at least for now.

The move lower in oil prices over recent weeks was driven by broader market jitters amid a liquidity scare in the banking sector, which saw two U.S. banks fold and Swiss giant Credit Suisse taken over by domestic rival UBS.

Going forward, the health of the global banking sector and the economy, as well as Western government's interest rate policies, will determine if $70 a barrel Brent was the lowest price for the international benchmark this year, or if oil has a shot at $100 per barrel following China’s reopening following COVID lockdowns.

Major banks including Barclays, ING, and Goldman Sachs – have slashed their oil price forecasts for this year following the plunge in prices, but they still expect oil prices to average more than $80 per barrel, and even over $90, in 2023.

As we head into the second quarter of 2023 market volatility is likely to remain high, but a strong rebound in Chinese oil demand amid constrained supply growth could move oil prices higher later this year. Markets will also play close attention to the ongoing situation in Ukraine as Russia intensifies it efforts to take control of Ukraine.

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