Crude oil prices failed to preserve gains and got back below the $63 handle. On Tuesday, Brent tries to hold above $62 and struggles to resume the ascent amid the lingering trade uncertainty. Moreover, the market remains vulnerable to further losses despite the futures are holding above the 100-DMA these days.
China expressed pessimism over a partial trade deal with the United States, which spooked investors and triggered risk aversion overnight. The lack of concrete progress in the negotiations between the world’s two largest economies unnerves oil traders amid the ongoing concerns over global oil demand due to further signs that the long-standing trading dispute hurts the global economy. Against this backdrop, Brent could extend the decline in the short term should Washington and Beijing fail to deliver positive updates on their discussions any time soon.
Additionally, the market feels the pressure from OPEC which shows little willingness to take additional steps to support the still unbalanced market. Besides, the US shale production continues to rise along with building inventories, which aggravates investor worries about the oversupplied market globally. As such, despite the current neutral dynamics, downside risks for Brent still prevail, at least in the short term.