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WTI trades with positive bias, remains below $63.00 as bulls seem cautious amid tariff jitters
- WTI attracts some dip-buyers on Tuesday, though it lacks any strong follow-through.
- Easing supply disruption fears and trade war concerns cap gains for the commodity.
- Geopolitical risk premium and a bearish USD act as a tailwind for the black liquid.
West Texas Intermediate (WTI) US Crude Oil prices edge higher during the Asian session on Tuesday, though the intraday uptick lacks bullish conviction. The commodity remains below a two-week high touched last Friday and currently trades around the $62.80-$62.85 region, up just over 0.30% for the day.
Signs of progress in nuclear deal talks between the US and Iran helped ease supply concerns, which, in turn, was seen as a key factor behind the overnight slide in Crude Oil prices. 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 on Wednesday, with a follow-up session planned for Saturday to assess progress.
Adding to this worries that an all-out trade war would trigger a global recession and dent fuel demand contributes to capping the upside for the black liquid. However, the geopolitical risk premium remains in play on the back of the protracted Russia-Ukraine war. This, along with the underlying bearish sentiment surrounding the US Dollar (USD), acts as a tailwind for the USD-denominated commodities, including Crude Oil prices.
Meanwhile, Trump accused Federal Reserve (Fed) Chair Jerome Powell of not moving fast enough to bring down interest rates. Moreover, the White House suggested that Trump and his team are studying if they could fire Powell, raising doubts over the Fed’s independence. This comes on top of the weakening investors’ confidence in the US economy and fails to assist the USD to register any meaningful recovery from a three-year low set on Monday.
The aforementioned mixed fundamental backdrop warrants some caution before placing aggressive directional bets around Crude Oil prices. Traders might also opt to wait for the release of the flash PMIs on Wednesday for cues about the global economic health, which, in turn, should provide some meaningful impetus to the commodity.
