West Texas Intermediate (WTI) US Crude Oil prices kick off the new week on a weaker note and for now, seems to have snapped a two-day winning streak to a near two-week high – levels just above the $64.00 mark touched on Friday. The commodity currently trades around the $62.80 region, down nearly 1.5% for the day, and is pressured by easing supply disruption fears.
The progress toward a US-Iran nuclear deal raised expectations that the return of Iranian oil to global markets would increase supply, which, in turn, is seen undermining the black liquid. In fact, The US and Iran agreed on Saturday to commence expert-level discussions to design a framework for a potential nuclear deal. The expert meetings are scheduled to begin in Oman on Wednesday, with a follow-up session planned for Saturday to assess progress.
Adding to this, Russian President Vladimir Putin’s one-day ceasefire in Ukraine on Saturday sparked hopes that tensions could de-escalate. This, in turn, would pave the way for further dialogue and reduced Crude Oil prices’ risk premium. However, the prevalent US Dollar (USD) selling bias, which tends to benefit USD-denominated commodities, is holding back traders from placing aggressive bearish bets around the commodity and helping limit deeper losses.
Hence, it will be prudent to wait for strong follow-through selling before confirming that the recent goodish recovery from over a four-year low touched earlier this month has run out of steam. Traders might also opt to wait for this week’s release of flash PMIs, which should provide a fresh insight into the global economic health and provide some meaningful impetus to Crude Oil prices.
