Crude oil prices are losing ground on Monday, coming off from the five-month highs registered last week below $72 amid the ongoing unrest in Libya. The supply cuts from OPEC, US sanctions against Iran and Venezuela, as well as the fighting in Libya are fueling expectations of tightened global supplies these days.
Against this backdrop, the market looks strong and ready for another rally should the situation in Libya deteriorates in the near term. Another bullish factor for Brent is further progress in the US-China trade relations. On Sunday, the US Treasury Secretary Steven Mnuchin said that a US-China trade agreement would go “way beyond” previous efforts to open China’s markets to U.S. companies. He also expressed hopes that the two sides were “close to the final round” of negotiations.
Technically, Brent looks overbought at this stage as the prices faced another psychological resistance around the $72 barrier. On the other hand, a daily close above the $71 handle will cap the downside pressure, while further dynamics in prices will depend on geopolitics and risk sentiment across the global markets.