Brent crude futures are trading lower on Friday as concerns over China reemerged after another report showed that factory activity in the country declined the most in nearly three years. Traditionally, weak figures from the second-world’s economy makes traders worry about the prospects for global growth and oil demand.
On the other hand, the market is underpinned by an upbeat tone of the latest US-China trade talks as both sides highlighted a progress in their relations and expressed readiness to further move towards a deal. In this context, the key date will be March 1. This is the deadline for striking a deal. Should the countries fail to reach a consensus on the key issues until then, Trump will impose more stringent measures which will eventually lead to further weakness in China’s economy.
So the oil market may show a neutral or directionless dynamics in February as many traders will likely prefer to sit on the fence ahead of the crucial date. On the upside, Brent potential is still limited by the $63 level, while the immediate support comes at $60, while a more important level lies at $58.60. As long as the contracts stay within this range, the tone remains neutral.
On the other hand, the market is underpinned by an upbeat tone of the latest US-China trade talks as both sides highlighted a progress in their relations and expressed readiness to further move towards a deal. In this context, the key date will be March 1. This is the deadline for striking a deal. Should the countries fail to reach a consensus on the key issues until then, Trump will impose more stringent measures which will eventually lead to further weakness in China’s economy.
So the oil market may show a neutral or directionless dynamics in February as many traders will likely prefer to sit on the fence ahead of the crucial date. On the upside, Brent potential is still limited by the $63 level, while the immediate support comes at $60, while a more important level lies at $58.60. As long as the contracts stay within this range, the tone remains neutral.