West Texas Intermediate (WTI) US Crude Oil prices struggle for a firm intraday direction during the Asian session on Tuesday and oscillate in a narrow band around the $61.75 area, just above a one-and-half-week low touched the previous day.
The US-China trade war continues to dominate the market sentiment amid mixed signals regarding the state of negotiations. Moreover, investors remain worried that ongoing conflict between the world’s two largest economies could trigger a global recession and dent fuel demand, which is seen as acting as a headwind for Crude Oil prices.
Meanwhile, several members of OPEC+ reportedly will suggest an acceleration of output hikes for a second consecutive month in June. Furthermore, perceived progress in nuclear deal talks between the US and Iran raises oversupply concerns. This turns out to be another factor that undermines Crude Oil prices and contributes to capping the upside.
The aforementioned negative factors, to a larger extent, overshadow the underlying US Dollar (SD(bearish sentiment and suggest that the path of least resistance for the black liquid is to the downside. This, in turn, supports prospects for an eventual breakdown below a one-week-old range and an extension of the recent pullback from the $64.70 region.
Moving ahead, investors this week will confront the release of the official Chinese PMIs, which, along with key US macro data scheduled at the start of a new month, including the Nonfarm Payrolls (NFP), should provide some impetus to Crude Oil prices. Nevertheless, the fundamental backdrop warrants caution before placing any bullish bets around the black liquid.
