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  • Oil cautious amid stronger USD, global growth and trade concerns.
  • Focus on US-China trade talks, Middle East developments for fresh oil trades.

Buyers continue to lurk just below the 56 handle, prompting a tepid bounce in WTI (futures on Nymex) over the last hour, but the bulls lack follow-through amid a cautious market sentiment heading into the crucial US-China trade talks.

The recent trade-negative comments delivered by the US President Trump weigh on the investors’ sentiment, as the US-China trade talks are set to resume on Tuesday. Trump said China might not want to sign a trade deal until after the 2020 US election. Further, oil traders watch out for any trade progress when the two trade teams meet this week.

The downbeat tone around the black gold can be also attributed to growing global economic slowdown concerns and its eventual impact on the demand outlook for oil. Meanwhile, broad-based US dollar strength, in the wake of upbeat US Q2 GDP data and a smaller Fed rate cut this week, continues to keep the recovery in check.

Middle East tensions, drop in rigs count offer support

However, the barrel of WTI manages to defy the gravity, as it derives continuous support from the supply disruption risks, with Middle East tensions around the Strait of Hormuz, still remaining high.

Further, a drop in the US Rigs Count also keeps the sentiment somewhat buoyed around the commodity. “The US energy companies last week reduced the number of oil rigs operating for a fourth week in a row, putting the rig count down for an eighth consecutive month, as cited by Reuters”.

Looking ahead, the US-China trade-related developments will have a major impact on the oil-price action while the US weekly crude supply reports are also closely eyed for fresh insights on the US supply-side scenario.

WTI Levels to watch