Brent crude extend the decline on Tuesday as risk sentiment looks mixed despite some positive headlines on the US-China trade deal. Traders express a cautious tone, fearing another rise in the US crude oil inventories. The American Petroleum Institute will release its stockpile numbers later today, with the Energy Information Administration follows it on Wednesday.
Oil registered fresh highs around $62 on Monday but retreated quickly and got back below the 100-DMA. Brent is challenging the $61 handle today, threatening the $60.25 intermediate support that lies on the way to the $60 psychological level. Brent could retreat further in the short term should the US inventories show a decent spike, or the Federal Reserve sounds more hawkish on monetary policy that traders expect.
On the other hand, the downside potential is limited due to the lingering hopes of additional measures from OPEC+ aimed at supporting global oil prices amid the record production numbers in the US shale fields. As such, the market is at a crossroads at this stage, with fresh trade-related or industry news could set a clearer tone for Brent.