Oil prices are making shallow recovery attempts on Tuesday after yesterday’s plunge by over 2%. Brent crude so far struggles to get back above the key $60 level but could gradually regain the upside momentum and stage a more pronounced ascent from recent lows in the short term.
Traders continue to digest the news that Saudi Aramco has restored full oil production and capacity to the levels they were at before attacks on its facilities in mid-September. This factor caps the upside momentum as market participants expected it would take longer to restore production in the country.
On the other hand, the market derived support from reports that production at the world’s largest oil producers declined in the third quarter and in September. According to a private survey, OPEC oil output has fallen to an eight-year low in September after attacks on Saudi oil plants cut production. At this stage, the survey could serve as a short-term bullish factor but rising dollar and a cautious tone in the global financial markets will likely cap the upside potential. Now, Brent needs to overcome the $60 handle and target the $61.30 area.