Oil shows biggest gains in two years, gaining over 8% this week after a rebound by nearly 10% a week earlier. As such, Brent has returned to the bullish market territory following aggressive losses during the fourth quarter. Still, the prices are still nearly 30% lower that the October highs above $86, so there is still room for a rally that could continue in a positive environment in the global financial markets.
Despite some progress in the US-China trade talks and signs of warming relations between the world’s two largest economies, the uncertainty over the trade deal continue to make investors cautious, which in turn could cap further upside potential in the crude oil market. Traders will closely monitor further developments on this front, with another round of talks will take place in late January.
Technically, Brent needs to confirm a break above $62 in the short term. The key local support now comes at $60. As long as the prices stay above this psychological level, the positive momentum prevails and could send the barrel to fresh one-month highs. The immediate resistance level comes at $62.50. In late November and early December, this area capped the bullish attempts, so it may be tough enough to break, especially ahead of the weekend, when traders are tempted to take profit after a decent rally.