Traders will focus on the results of the US-China talks as well as on the OPEC+ panel meeting
Oil prices have been trading within a tight parallel channel these days after failed attempts above the $46 handle last week. Brent remains under some selling pressure on Friday, struggling to regain the $45 handle as risk aversion prevails in the global financial markets.
The futures were nearly unfazed by the reports from OPEC and the IEA this week, with both organizations revising lower their outlook for demand recovery this year. US stockpiles data also failed to bring volatility into the market that remains in a consolidative mode.
In part, traders are cautious ahead of the US-China trade negotiations scheduled for the weekend. Considering the recent rise in tensions between the two countries, the talks will hardly bring any breakthrough in relations, which poses a threat to risky assets including oil.
Also, the ongoing coronavirus pandemic coupled with rising global oil supply makes investors doubt in demand recovery in the medium- and longer-term. as a reminder, OPEC and its allies are increasing output starting from this month.
Next week, traders will focus on the results of the US-China talks as well as on the OPEC+ panel meeting. However, the meeting could be a non-event, as Russian Energy Minister Alexander Novak said earlier this week he does not expect quick decisions on output cuts during the upcoming discussions. Anyway, some comments from this front could at least bring some volatility and make Brent exit the familiar trading range in either direction.
From the technical point of view, the prices need to make a decisive break above the $45 level in order to see a more sustainable recovery in the near term. On the downside, significant local support arrives around $44.50. A break below this level could pave the way towards $44. In the longer term, the futures could recover towards $50 if the pandemic continues to wane, supporting demand recovery expectations.
