After failed attempts to challenge the $60.50, Brent crude retreated below the $60 psychological level and finished the day 0.5% lower. On Friday, the futures are trading with a modest bullish bias, moving in tandem with risk sentiment in the global financial markets.
Oil prices continue to follow global developments amid a lack of meaningful industry news, with the US-China trade war remains in focus. In the short-term, Powell’s speech in Jackson Hole will set the tone to all asset classes including oil. Should the Federal Reserve governor fail to deliver a dovish message, risky assets will be disappointed. In this scenario, the greenback could rally across the board, which is negative for Brent.
In a wider picture, the upside in the oil market is still limited due to lingering concerns over the global yields curve, trade war, slowing global economy, yuan devaluation and rising activity in the US shale oil fields. Later today, Baker Hughes will deliver its weekly oil rigs data and should the drilling activity increase, the release could serve as the additional bearish factor for the market. As such, Brent will likely finish the trading week below $60 and could even get under the $59 handle.