HelenRush

Trump fuels oil market volatility

OANDA:BCOUSD   Brent Crude Oil
Brent crude saw a very volatile trading on Monday with markets were digesting the unexpected US-China trade war escalation after Trump threatened to tighten tariffs on Chinese exports. The announcement triggered a massive sell-off in the global markets, including oil . Investor sentiment has stabilized since then but some caution still prevails, which caps the upside potential in Brent.

After a brief dip below the $70 handle, the futures recovered above $71 but failed to challenge the $72 barrier and turned lower on Tuesday. On the one hand, buyers’ enthusiasm was dampened by Trump’s threats, fueling concerns over oil demand in China. On the other hand, the market is still supported by expectations of a decline in global supplies due to US sanctions against Iran and Venezuela.

Technically, Brent needs to hold above the 200-DMA that lies marginally above the $69 handle. Otherwise, the short-term outlook will deteriorate. On the upside, prices need to regain the $71 level at least but it could be difficult should US-China tensions continue to rise.
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