Crude Oil Prices Steady at Start of Week

Crude oil has reversed directions on Monday and has posted slight gains. In the North American session, West Texas Intermediate crude oil futures are trading at $57.30, down $0.57 or 0.98%. Brent crude oil futures are trading at $62.76, up $0.68 or 1.07%.

Investors Still Optimistic Over Trade Deal

The trade war between the U.S. and China has taken a toll on both economies, which has dampened global economic conditions. There have been recent reports that the sides are close to an interim agreement, but one key stumbling block is China’s insistence that the U.S. must first remove all trade tariffs. Still, there is optimism in the markets that the trade talks are moving in the right direction. On Sunday, the official Chinese news agency said that the two sides had “constructive talks” on the weekend. If a deal can be reached, even an interim one, demand for oil from China and other major economies will jump, which would boost crude prices.

Crude Inventory Surpluses Continue

U.S. crude inventory reports continue to show surpluses, which is weighing on crude prices. Last week, the Energy Information Administration (EIA) report showed a surplus of 2.2 million, which was considerably smaller than the two previous releases. Still, this reading easily beat the forecast of 1.5 million. The EIA has reported only one drawdown in the past eight weeks, as the crude stockpiles remain at high levels.

Technical Analysis

Crude has been range-bound since the first week in November. The 200-EMA remains relevant, as it is located just below where crude is currently trading. We continue to see pressure on resistance at 57.65 – crude tested this line as recently as Thursday. Close by, there is resistance at 58.15. On the downside, the pair has room to move lower, with support at the round number of 55.00.