Oil Is Back Where It Was Before COVID – And That’s Not Bullish
Crude oil prices are slipping back into a familiar range that defined much of the pre-pandemic era, raising fresh questions about whether the market can sustain prices above $70 a barrel in the current macro environment.
After years of extreme volatility, Brent crude has drifted back toward the $52–$70 zone that dominated trading between 2017 and early 2020. Prices briefly pushed higher in recent months, but the move has struggled to gain traction. On January 23, Brent was trading near $65, effectively re-entering what analysts describe as its pre-COVID “comfort zone.”
Key Takeaways
- Brent crude has returned to the $52–$70 trading range that defined much of the 2017–2020 period
- Rising oil supply from the US and Canada is increasing surplus pressure in global markets
- Deflationary signals from China are weakening the demand outlook for crude
Market strategists say this return is not accidental. Instead, it reflects a growing imbalance between supply and demand that is starting to resemble conditions seen before the pandemic disrupted global energy markets.
Rising North American supply pressures prices
One of the main forces weighing on crude is a steady increase in oil production across the US and Canada. North America remains the largest source of incremental global supply, and output growth has continued even as demand growth shows signs of slowing.
According to analysis highlighted by Mike McGlone of Bloomberg Intelligence, expanding supply from the region is creating a surplus that is difficult for prices to overcome. As more barrels enter the market, crude needs a strong demand shock or geopolitical disruption to justify sustained trading above historical ranges.
Without that catalyst, the market appears to be gravitating back toward price levels that previously balanced production economics and consumption trends.
China’s deflation adds demand-side risk
On the demand side, China is emerging as another key pressure point. As the world’s largest crude importer, shifts in Chinese economic momentum tend to have an outsized impact on global oil prices.
Recent signs of deflationary forces in China suggest weaker industrial activity and softer energy consumption. That combination reduces the likelihood of a strong demand rebound capable of absorbing rising North American output. Analysts warn that unless China’s growth outlook improves meaningfully, oil prices may struggle to escape their current range.
The chart accompanying McGlone’s analysis underscores this relationship, showing crude prices weakening alongside indicators tied to Chinese economic stress.
Can oil stay above $70?
The broader implication for markets is that oil may be transitioning away from the post-pandemic era of persistent supply shocks and elevated prices. Instead, the market appears to be re-anchoring to pre-2020 dynamics, where supply growth and macroeconomic conditions played a larger role than geopolitical risk premiums.
For crude to hold above $70 for an extended period, analysts say it would likely require either a sharp deterioration in global supply chains, a significant acceleration in demand, or renewed geopolitical disruptions that materially constrain output. Absent those factors, the balance of risks appears tilted toward consolidation or further downside.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
