The catalyst for last week's rally was the hope in an agreement between the United States and China that would put an end to the ongoing trade dispute between the two largest economies in the world. Also the adherence to the plan and OPEC to cut production, reduce the excess of global supply and stabilize prices helped to support the rally.
Stopping the increase in prices, perhaps, is concern for the increase in production in the United States and for the decline in global demand.
After predominantly sideways trading at the start of the week, crude oil prices came on Thursday in response to a Wall Street Journal report that Treasury Secretary Steven Mnuchin had launched the idea of easing tariffs on Chinese goods. The rally was halted, however, after Treasury officials told CNBC that "for now they are not considering tariff cancellations". The buyers took revenge on Friday when Bloomberg News and CNBC reported that China would offer to increase imports of goods from the United States over the next six years in an attempt to eliminate the US trade deficit.
Last week's rally indicates that two events will occur to support the current rally. Firstly, the United States and China must continue to make progress towards a trade agreement, and OPEC must continue to adhere to its strategy to limit production. This is due to the US goal of becoming net exporters while reducing dependence on foreign oil. Despite the series of potentially bullish events, traders remain cautiously optimistic about the upside potential of the market mainly due to concerns over the rise in US production and the difficulties in reaching a trade agreement between the US and China quickly.
JayRally from BesomebodyFX.com
