In early Asian trading on Monday, international oil prices continued last week's robust rise, benefiting from eased trade relations between China and the U.S. and multiple supply-demand factors. As of the time of writing, Brent crude futures rose by 27 cents to $64.18 per barrel; WTI crude futures increased by 28 cents to $61.30 per barrel. Both major benchmark crude prices rose by more than 4% last week, marking the largest weekly gain since mid-April.
One of the main drivers of the oil price increase is the market's heightened expectations of an improved global trade environment. According to several media reports, China and the U.S. made "positive progress" in talks held over the weekend, with the U.S. stating that an agreement had been reached to reduce the trade deficit, and Asian countries also mentioned that "important consensus" was achieved. Although specific details have yet to be disclosed, the market generally anticipates that a joint statement will be officially released on Monday, boosting optimistic sentiment towards the outlook for oil demand.
On the supply side, although OPEC+ plans to accelerate output increases from May onward to meet market demand, April data showed the organization's overall production slightly declined, which has to some extent supported current oil prices. However, expectations of increased output have also curbed the momentum for further price rises.
Additionally, negotiations surrounding the Iran nuclear agreement have added uncertainty to the market. The U.S. and Iran concluded a round of discussions in Oman, and if a deal is subsequently reached, the re-entry of Iranian oil into the market could increase global supply and potentially exert downward pressure on oil prices.
On the other hand, U.S. oil and gas drilling data also warrants attention. According to Baker Hughes, the number of active U.S. drilling rigs fell to its lowest since January last week, indicating that energy companies remain cautious about future oil prices.
From a technical perspective, WTI crude has rebounded and stabilized near $57 since early May, breaking through the $60 threshold consecutively and currently operating above $61, forming a short-term upward channel. The MACD indicator shows a bullish pattern, with short-term support around $60. However, current oil prices have approached the previous strong resistance area of $61.80 to $62.20; if there is a breakthrough with increased volume, it could challenge the high of $64. If resistance leads to a pullback, the 20-day moving average below $60 or the neckline at $59.50 could become key support.
Overall, geopolitical developments, supply dynamics, and technical factors are intertwining, which may heighten short-term volatility in oil prices, and the market should remain cautious.
