Oil market: upside potential is limited

OANDA:BCOUSD   Brent Crude Oil
Brent futures finished decently higher for the second consecutive trading day on Wednesday. Today, the prices extend gains, with Brent is challenging the $72 barrier again, having registered a daily high of $72.30. The short-term technical picture looks constructive at this stage.

The EIA report was mixed yesterday but traders decided to focus on positive numbers and took the barrel higher. According to the official data, US crude oil inventories rise 5.4 million barrels last week, while production declined by 100K barrels to 12.1 million barrels per day. The market was also supported by geopolitics as Saudi Arabia reported drone terrorism against pipeline infrastructure.

However, the bullish potential for Brent remains limited due to the lingering global risks from the rising US-China trade tensions to weak economic data from the world’s two largest economies. Technically, prices need to confirm a break above the $72 figure in order to challenge the $72.50 intermediate resistance which capped the bullish attempts early in the week.
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