There are not enough positive drivers for a decisive break above the $50 level at this stage
Oil prices struggle to regain upside momentum on Tuesday after the recent rejection from March highs marginally below the $50 psychological figure. Earlier in the day, Brent crude extended losses to the $48.10 area but managed to climb to the flat-line afterwards. Now, the futures need to regain the $49 level in order to stay afloat in the short term. as of writing, Brent crude was changing hands in the $48.55 area, unchanged for the day.
Rising coronavirus cases and fresh virus containment measures in some regions capped further upside potential in the market. Besides, traders opted to take profit ahead of the $50 important hurdle. Furthermore, there are not enough positive drivers for a decisive break above this level at this stage.
Also, risk sentiment in the global financial markets has deteriorated since the start of this week, as Brexit-related uncertainty coupled with rising virus cases and US-China tensions weighted investor tone, outweighing the optimism related to vaccines and the potential economic recovery.
Later today, the weekly inventory report from the API, followed by the official release from the EIA due on Wednesday could affect short-term dynamics in the oil market and set a fresh tone for Brent crude. If the data points to a rise in stockpiles and production in the United States, the prices could come under additional selling pressure and derail the $48 figure. In this scenario, the $47 level will come back into market focus.
On the positive side, the expectations of additional stimulus measures in Europe and the United States could support the oil market as well as other risky assets. In this context, the ECB and the Federal Reserve policy meetings as well as the EU summit due later this week could push Brent higher if the authorities announce fresh support for the economy amid the ongoing coronavirus pandemic.