Oil rally stalls at one-week highs - $55.00 a step too far

USOil pulled back from one-week highs of $54.74, dipping briefly under $54.00 to $53.97 before heading back over $54.35 into the US open. The contract has recovered from last week’s near five-month low of $50.60, helped by the apparent cancellation of US tariffs on Mexican goods, and prospects for the extension of OPEC production cuts through year end. Russia is the only major producer not yet agreeing to maintaining output caps, with reports saying it is concerned that it would lose market share to the likes of the US if it maintained lower output. The easing of trade tensions may put a floor under oil prices for now, though the market will pay keen attention to Russia in the coming days and weeks ahead of the key meetings in Vienna.

The Russian tones remain conciliatory but as ever the picture remains complicated. One on hand there is the situation in Libya and the ongoing crisis in Venezuela support prices along with the OPEC production cuts, however weakening global demand from the ongoing trade tensions continues to constrain demand. June 25-26 is the 176th Meeting of the OPEC and non-OPEC Conference and a key week as the US driving season begins increasing demand for US gasoline.