After the initial jump on Monday morning, crude oil prices lost their steam and retreated on a daily basis. Today, Brent is attempting to regain the bullish momentum but the impetus looks limited as the market eyes fresh weekly API data. Brent is treading water around $69.70, +0.36 per cent on the day. The overall tone in the market looks bullish and the asset feels the additional support from the improved risk sentiment as the trade war fears continue to recede. The bulls also hope for possible tighter sanctions on Iran. However, we wouldn’t assess this factor as positive for the longer-term prospects as Tehran may simply diversify its exports and find other buyers for its oil.
Brent remains below the $70 threshold ahead of weekly API report. Should the numbers reflect just a modest increase in inventories, the current upside bias won’t be hurt much. Some market participants expect to see a drawdown of stockpiles. In this case, the barrel will likely attack the $70 level again, though the market will be traditionally more focused on the official EIA data due Wednesday.
In the longer term, the market mood will continue to depend on US data as well as on further signals from OPEC.
By Helen Rush
Senior Analyst at Capital Markets