WTI struggles to capitalize on the previous day’s move higher to over a one-week top.
Sustained USD buying is seen as a key factor acting as a headwind for the commodity.
Trade optimism and Trump's warning of sweeping Russia sanctions support Oil prices.
West Texas Intermediate (WTI) US Crude Oil prices edged lower during the Asian session on Tuesday and eroded a part of the previous day's strong gains to over a one-week high. The commodity currently trades just below mid-$66.00s, down 0.40% for the day, though the downside seems cushioned.
A trade agreement between the US and European Union (EU) adds to the recent optimism over a US-Japan deal and eases investors' worst fears. Moreover, news of a possible extension of the US-China trade truce lifted hopes for an improvement in global economic activity and a pickup in fuel demand, which, in turn, might continue to act as a tailwind for Crude Oil prices.
Meanwhile, US President Donald Trump set a new deadline of 10 or 12 days for Russia to make progress towards ending the war in Ukraine. Trump warned of severe sanctions if Russia failed to act and said that his administration would impose 100% secondary tariffs on countries continuing to buy Russian exports. This could impact Russia’s oil flows and could also support the black liquid.
Bulls, however, might refrain from placing aggressive bets amid a broadly firmer US Dollar (USD), which tends to undermine demand for the USD-denominated commodity. Investors might also opt to wait for the outcome of a two-day FOMC policy meeting on Wednesday before positioning for a firm direction. This, in turn, backs the case for some near-term consolidation for Oil prices.
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