Oil is not ready for a bullish breakout

OANDA:BCOUSD   Brent Crude Oil
Speculations about further US sanctions on Venezuela propped up oil prices. But the reports failed to give a substantial lift to the markets, the same as the recent sanctions on the country’s energy sector imposed on Monday. Brent is changing hands marginally above the $61 threshold on Wednesday after brief attempt to challenge the intermediate resistance at $61.60.

The market lacks the directional impetus and is trading flat in the weekly charts. Oil traders are closely monitoring developments in geopolitics where the US-China trade talks come to the fore. Investors hope to see some progress in trade relations between the two countries despite the scandal surrounding Huawei. This, coupled with Saudi Arabia plan to cut production further helps oil prices to stay afloat.

But the current conditions don’t suggest a rally could take place in the market any time soon, unless there is a major breakthrough in trade negotiations, or a steep dollar sell-off after the FOMC meeting. Both scenarios are actually quite unlikel, so the upside potential in Brent will remain limited in the near term, while the bearish risks are still present.

From the technical ponit of view, the $59 handle remains an important support area as a break below this level will make the technical picture worse. A daily close above $61 is needed for another run at the $62 barrier.