Oil market: too early to call a victory

OANDA:BCOUSD   Brent Crude Oil
Crude oil prices are rising for an eights session in a row, which is the longest winning streak since mid-2017. In late December, Brent found a bottom marginally above the $50 handle and rallies since then. On Wednesday, the prices approached the psychological barrier at $60 amid the widespread optimism over the US-China trade talks. By the way, China’s foreign ministry confirmed today that longer-than-expected negotiations suggest the two countries are very serious in trade talks, which could further support risk-on sentiment in the global markets including oil .
Investor optimism over trade is fuelling oil prices amid the easing concerns over the global slowdown and in turn over the global oil demand. So the actual progress in talks does matter for Brent in this context. But this is not enough to fuel further sustainable rally in crude as traders need to see positive developments in the oil market itself to get the barrel out of the bearish market.
In the short-term, Brent could retain the bullish tone but the risk of a downside correction is rising as the $60 level could deter the bulls and give room for a local profit-taking. Besides, the buyers could become exhausted after an aggressive rally since late-December. But the potential pullback will likely be limited as long as investors continue to cheer the warming of relations between the US and China.