Brent crude futures failed to shake off the yesterday’s weakness and looks set to suffer another disappointing day on Tuesday, with prices slipped below the $65 mark again. The market lacks momentum to preserve gains and seems to attract more bears in the short term.
The recent move lower is on the back of a widespread dollar appreciation amid increasing Treasury yields. A lack of risk appetite doesn’t bode well for Brent as well. These are the local bearish drivers for the asset, while the broader picture shows the market participants continue to fear the soaring U.S. production, which is threatening to offset OPEC members’ efforts. This is the reason why crude prices have mostly ignored OPEC Secretary-General Mohammad Barkindo’s statement that the cartel’s compliance with the provisions of the agreement reached 133% in January.
In the short term, Brent will likely to continue to follow the greenback’s dynamics. Tomorrow, the market will focus on API data. Should the report show an increase in crude oil and gasoline stockpiles, prices will head toward a more significant slide and may threaten the $64 level with the next target at $63.20. This scenario could be exacerbated by a continued USD demand.