Crude oil prices are making shallow recovery attempts on Tuesday after the yesterday’s decline. Despite the general risk sentiment has improved somehow, commodity traders refrain from buying due to some conflicting signals.
Investors seem to believe that the threat of supply shortfall has abated. Some economic signals point at the prospects of slowing global growth and weaker oil demand as a result. These fears coupled with the potential increase in OPEC production make traders worried that sanctions on Iran won’t bring supply deficit. In this context, the downside risks for Brent continue to persist as the previous fears over US sanctions look overestimated now.
And let’s not forget about the USD strength. The buck continues to receive support from a risk-off environment and from the “hawkish” Federal Reserve stance. The US currency could strengthen its positions ahead of the next Fed meeting in December when another rate hike will likely take place.
From the technical point of view, Brent needs to hold above the $77 handle in order to proceed with recovery attempts with the initial target at $78. Otherwise, the price will focus on the $75.65 area again.