WTI crude oil and its Brent counterpart remain above $70 and $75/barrel respectively, but prices appear to be flattening somewhat as the US rig count rises and funds begin to cut bearish bets.
"Last week saw the US rig count rise to 844, the highest level seen since March 2015," reports Saxo Bank head of commodity strategy Ole Hansen. Hansen also notes that a delegation of Iranian diplomats will be touring Europe, Russia, and China in an effort to secure buyers following the US' decision to pull out of the nuclear deal.
"Oil traders will watch the progress of the Iranian tour closely, along with the clashes between Israel and Iran in Syria".
Beyond crude, Hansen says that gold and silver have held key support levels at $1,300/oz and $16/oz respectively as the US dollar rally loses momentum.
"Dollar strength is easing with emerging market and commodity currencies the main initial beneficiaries," says Saxo Bank head of FX strategy John Hardy. Looking at EURUSD, however, Hardy says that the benchmark pair cannot truly be seen as reclaiming bullish momentum until it retakes the 1.22 area to the upside.
"One potentially euro-positive development is the currency's ability to shrug off the political news out of Italy [where a populist government is forming]," Hardy adds.