Brent crude remains stuck between the 100- and 200-DMAs on Monday, with futures struggling to get back above the $67 handle after marginal gains late last week. The market remains in limbo against the backdrop of some contradictory factors.
Some pressure comes amid reports that tropical storm Barry weakened to a “depression”, which means that there won’t be long-lasting disruptions in U.S. energy infrastructure. So now, traders have to price out a major decline in oil production in the U.S. Gulf of Mexico. Also, oversupply concerns increased after the EIA and OPEC reports pointed to slower demand growth and a further rise in non-OPEC production in 2020.
Fresh Chinese data revealed the slowest quarterly economic growth in at least 27 years. The report reinforced worries about demand in the world’s largest oil-consuming country. Against this backdrop, considering lack of news from Iran, Brent will likely remain under some pressure in the short term, while the potential bullish attempts will be limited. The immediate resistance comes around $67. A clear break above this barrier could partially ease the downside pressure.