The US crude oil stocks decreased sharply last week, but production continued to grow and hit fresh record volumes. The initial market reaction to the report was , however, we don’t see any significant reason for a sustained rally in the context of US data as the threat from non-stop increasing production doesn’t abate.
The only positive driver for Brent now is the potential reimposing US sanctions on Iran next month. But the market participants shouldn’t too rely on the prospects of a major decrease in Iranian exports as it was in 2012, because China will hardly join the action this time, given the severe trade tensions between two countries.
Technically, Brent needs a clear break above the $68 level and enough impetus to probe the local resistance of $68.40 which will open the way to $69. However, the current rebound in risky assets won’t be enough to fuel such a recovery as the market needs some additional drivers.