Crude oil prices continue to trade within a limited range for over a month already, being unable to find a clear direction due to conflicting signals. The upside momentum is capped by concerns over trade and global demand, while the selling pressure is limited by OPEC+ efforts and US sanctions on Iran and Venezuela.
As such, Brent is now stuck within a $59-$63 range, a break out of which may be around the corner. In the days to come, trader attention will be focused on trade developments between the US and China. Yesterday, the US administration official said Trump still wants to meet China’s Xi Jinping in an effort to end the trade war. So, fresh positive news from this front could fuel Brent demand, along with riskier assets in general.
But for the futures to get out of the current channel, the market needs to see a substantial progress towards a deal. OPEC-led supply cuts and US sanctions against Iran and Venezuela could also help. But even in the case of a breakthrough, the expected surge in US shale output, concerns over economy and a stronger dollar will likely keep the bulls in check.