On Friday, Brent managed to recover from weekly lows around $60.65 and finished at $62.65. However, as the market sentiment has deteriorated again, the prices slipped back below the $62 handle and threaten the 100-DMA again at the start of the trading week.
Risk aversion in the global financial markets is due to the spreading protests in Hong Kong along with contradictory signals from the trade front. On Sunday, Trump said he has not agreed to lift China tariffs, which spook investors and fueled risk aversion across the board. Now, traders shifted into a wait-and-see mode, which caps the upside attempts in the market.
Meanwhile, Baker Hughes data showed a third straight week of decline in the number of active US rigs drilling for oil by 7 to 684 last week. Despite another positive report, traders were unfazed by the report, partly due to the fact that the declining number of oil rig count doesn’t translate into declining production in the country which remains at record volumes.
Technically, Brent needs to stay above the 100-DMA in the short term in order to regain the $62 handle and refrain from further losses. The upside potential will depend on the news from the trade front which continue to set the tone for risky assets in general.