Ahead of this week’s resumption of the U.S.-China trade talks and FOMC monetary policy decision, crude oil prices regained some ground on Monday and keep trading with a modest bullish bias today, as traders hope for at least some progress in relations between the two world’s largest economies after a break.
Meanwhile, U.S. President Donald Trump said overnight that a small Fed rate cut “is not enough”, which fueled expectations of a more dovish statement from the Federal Reserve on Wednesday. Against this backdrop, Brent climbed back to the $64 area which caps gains since mid-July. But the futures are yet to confirm a break above this local resistance which is rather strong at this stage.
Despite the current positive sentiment in the market, the upside potential is limited as concerns about the pace of global economic growth persist. As such, Brent needs a more significant fundamental driver to stage a robust ascent from the current levels. As long as the prices remain below the 200-DMA around $65.30, downside risks remain in the short term.