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Oil struggles to regain upside impetus
Commodities
07/09/2019

Oil struggles to regain upside impetus

Oil prices continue to attract sellers on bullish attempts. After a brief jump above $65, Brent finished below $64 on Monday.

Oil prices continue to attract sellers on bullish attempts. After a brief jump above $65, Brent finished below $64 on Monday. Today, the futures are trying to get back above this level but the impetus remains subdued, in part due to a stronger dollar. The US currency extends the ascent since the release of strong jobs data as traders now expect the Fed will deliver a modest rate cut later this month.

On the geopolitical front, tensions between the US and Iran persist. Over the weekend, Iran announced it had begun enriching uranium past the previous limit of 3.67%. The level of enrichment then surpassed 4.5% on Monday. Trump has issued a warning to Iran after the country moved to increase uranium enrichment beyond the purity threshold. All this could lead to new sanctions against Tehran and fuel worries about supply disruptions. This in turn may support oil prices down the road.

Technically, Brent needs to challenge the $64.50 area and target the $65 threshold once again so that the downside pressure to ease. In the short term, market will focus on stockpiles data from the US as well as signals from the Federal Reserve. The FOMC meeting minutes is due on Wednesday.

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