- Uncertainty surrounding OPEC+ output accord, receding geopolitical tension caps the WTI upside.
- Optimism spread through US-China trade truce pleases buyers.
- Global manufacturing numbers and political headlines will be the key to follow.
Although market optimism surrounding the US-China trade deal continues to spread over the energy prices, recently mixed headlines from Iraq and Turkey cap WTI around 5-week high of $60.06 before taking rounds to $59.40 during the early Asian session on Monday.
Presidents of the US and China finally agreed on a trade ceasefire between the world’s two largest economies with further talks to restart from July 02. The US promised to refrain from additional tariffs on China and giving some leeway to Huawei (for the time being) while China offered more farm imports from the US.
During the weekend, Russia and Saudi Arabia showed an inclination to extend the global oil production cut accord by 6-9 months.
While trade truce and likely production-cut extension seem positive to the energy benchmark, latest comments from Iraq Oil Minister that it is too early to say about the OPEC+ output deal extension, as conveyed by the Reuters, weigh on prices.
Adding to the price pressure could be Turkish President Erdogan’s statements that the US President Donald Trump supported his decision to import Russian S-400 arms, which in-turn might ease some geopolitical tension off between the US and Turkey that has recently caught market attention.
Doubts surrounding the output cut extension from the Organization of the Petroleum Exporting Countries (OPEC) and its key allies, coupled with receding geopolitical tension, confront the trade positive news.
Traders might look for the monthly manufacturing numbers from key economies in order to get fresh insights.
$60.60/70 area comprising multiple lows marked in May month acts as an immediate upside resistance ahead of diverting buyers to $61.00 and April 26 low of $62.26.
On the other hand, a downside break of $56.30 can recall $54.80 on the chart.