Crude oil prices remain on the defensive on Monday, nursing losses for a sixth day in a row, as traders continue to react to de-escalation in geopolitical tensions between the United States and Iran. Amid profit taking, Brent was rejected from highs around $71, down to the $64.50 area. At the start of a new trading week, the futures are desperately trying to cling to the $65 handle.
The US and China are expected to sign a phase one trade deal this Wednesday and this event could serve as a bullish catalyst for the oil market, as the first step towards resolving the long-standing trade dispute will be taken by investors as a precondition to improvement in the global economic climate down the road.
Also, traders will pay attention to the industry news out of the US. As a reminder, the EIA report last week showed that crude oil and gasoline stockpiles increased unexpectedly, which disappointed investors. Should the agency reveal another bearish report, Brent may come under a more severe pressure despite progress in the US-China trade relationship.
As for the dollar factor, mixed dynamics in the greenback doesn’t affect oil prices much at this stage. Technically, Brent needs to firmly get back above the $65 handle in order to initiate a local reversal after a steep sell-off witnessed last week.