Brent crude extends losses for a third day in a row. Trade-related optimism has waned quickly and investors show a limited demand for risky assets. Moreover, tensions between the world’s two largest economies could reemerge as recent developments demonstrate. In particular, China vowed to take countermeasures against the U.S. in response to a bill that favors the Hong Kong protesters. This could be followed by a respective reaction from Washington which could trigger an even more cautious tone in the markets.
Another bearish factor for Brent is another downbeat growth outlook from the IMF which soured expectations for global demand. The Fund has downgraded growth estimates to 3.0%, which is the weakest rate since the 2008 financial crisis. Also, Brexit-related headlines affect the market these days. Today, hopes of a Brexit deal got dented as the UK government is downbeat on chances of a Brexit deal.
In these conditions, oil prices will likely remain under pressure in the short-term, with traders focus now gradually shifts to US oil stockpiles data from API and the EIA due today and tomorrow respectively. Technically, Brent may remain below the $60 handle in the near term and will continue to threaten the $58 level which stands as a local support area.