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Oil market: further upside looks limited
Commodities
08/30/2019

Oil market: further upside looks limited

Brent crude is gradually extending gains for a fifth day in a row on Friday. Prices got back above the $60 handle but are yet to confirm a bullish breakthrough as...

Brent crude is gradually extending gains for a fifth day in a row on Friday. Prices got back above the $60 handle but are yet to confirm a bullish breakthrough as the momentum seems to be fading in early trading, with the $60.60 area served as a local resistance on the way to $61.

Risk sentiment has improved somehow after the US and China gave signs that the two countries will resume trade negotiations next month. By the way, Trump said some discussions were taking place on Thursday already. Beijing confirmed the discussions, but noted that it was important for Washington to cancel a tariff increase. As a reminder, a new round of US tariffs on some Chinese goods is scheduled to take effect on Sunday.

As such, the trade tensions remain high despite latest comments from both sides, so the upside potential for risky assets including oil remains limited at this stage. A weekly close below the $60 handle will weaken the technical picture for Brent. In the short-term, strong dollar will likely cap the bullish attempts, especially if the upcoming US economic reports surprise to the upside.

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