Brent turns lower on demand concerns

China's export growth supported crude prices Tuesday, but gains are limited after Saudi Arabia sharply reduced prices over the weekend for Asian buyers.

A report earlier Tuesday showed China's exports rose 25.6% in August from a year ago, while July's gain was 19.3%. Despite the headwinds prompted by outbreaks of Covid-19, economic growth beat analysts' expectations, suggesting a resilient global economy.

Hot summer demand waning?

It is expected that oil prices will be hard to move higher once the summer driving season ends in the US after Labour Day.

The US regulatory agency said Monday that more than 80 per cent of Gulf oil production remains closed since Hurricane Ida, which could limit future gains by increasing supply once the Gulf is reopened.

Brent trades in a range

The technical picture at the moment suggests that Brent is trading in a narrow range between the resistance level of $72.55 and the support level of $71.79. If Brent exposes its 34 WMA, then its next stop will be $71.79. A break below $71.79 would push prices towards 71.30 at yesterday's low.

Conversely, the upward movement could be bolstered by positive momentum above the 34 WMA, pushing oil to the high of the week at $72.55.

Events of the day

On Tuesday, German industrial production rose by 1.0% in July. The release of the September ZEW survey of economic sentiment, due today at 12:00 EEST, will soon provide further clues.

Later in the session, investors will also watch for the opening on Wall Street after the holiday on Monday.