This week opened with oil prices increasing. Brent broke through the resistance line of local downtrend, in which the market has been trading since April 25th. fBulls have broken $ 71/barrel and quotes continuing to grow further. The last major price consolidation (from May 02 to 10) is completed. This zone is the lower boundary of the global uptrend, in which black gold has been trading since the end of last year. And the fact that buyers have defended it speaks of the preservation of general bullish sentiment. The rally continues. For now.
In terms of technical analysis, bulls need to confidently break through the level of $72. If this happens, returning to $74 or higher will be only a matter of time. Otherwise, traders need to observe other market players actions in the area of $69-70. If this area will be broken, then there is a possibility of a global correction.
As always, the main fundamental factors in quotations movement are political. As always, the initiator is President Trump. The President of the United States raised trade duties on Chinese goods worth $200 billion from 10% to 25%. Beijing has promised to take retaliatory action. Chinese Vice Premier remained in Washington for the continuation of trade negotiations and this was taken as a positive signal by market.
It looks like the United States pressed too hard on the PRC, demanding a change in legislation and much more. It needs to take into account that trade war will affect virtually the entire commodity market. For example, a separate issue is the purchase of agricultural products by China from the United States, which directly affects the cost of soybeans and other crops.
As for oil, according to the latest IEA data, both countries provide 34% of world demand (according to data for the first quarter of this year). Therefore, if the trade war gains momentum, then this will greatly hinder price growth for petroleum products. And this is exactly what Donald Trump is looking for.