WTI oil prices reached a multi-week high in early Monday trading before giving up some gains and now sit just above the $64 mark. Markets are growing more optimistic about the prospects of a trade agreement between the US and China ahead of a meeting between senior officials from both countries that could pave the way for a deal between the world’s two largest economies. Progress in these talks could boost the global economic outlook and fuel an increase in oil demand, with the recent rise in prices largely driven by these expectations. Adding to the positive sentiment is the continued weakening of the US dollar. Concerns over the country’s fiscal position are prompting traders to price in the possibility of interest rate cuts by the Federal Reserve—offering further support to oil, as a weaker dollar typically pushes up the price of dollar-denominated commodities. Against this backdrop, with so much depending on the outcome of the US-China negotiations, crude prices will likely remain highly sensitive to any developments on this front.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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