Oil pressured by uncertainty

OANDA:BCOUSD   Brent Crude Oil
After a short-term relief, crude oil prices resumed the downside move on Thursday. Brent holds above the $62 handle but could get back below in the short term as investor sentiment in the market remains skeptical and cautious, at least as long as the barrel is trading under the $63 barrier.

According to EIA data, US crude oil inventories climbed by 1.3 million barrels last week. Production remained at the record 11.9 million barrels per day registered late last year. Despite the report was not as bearish as API data and investor estimates, traders found the release more neutral that positive, while fears of resuming output growth persist.

Another source of concern in the market is uncertainty ahead of another round of US-China trade talks due in Beijing next week. Investors doubt that the two world’s largest economies will be able to come to a consensus and resolve the key issues to strike a deal before the March deadline.

Against this backdrop, Brent will likely remain pressured in the short term, especially amid the persistent dollar demand – the USD index is trading at fresh two-week highs on Thursday. Should the prices hold above the $61 support, the downside potential will remain limited in the short term.