Oil futures: Brent hits $79/b after after breaking resistance level  

Quantum Commodity Intelligence – Crude oil futures Tuesday were higher as Brent looked to consolidate the recent breakout level above $77.50/b, buoyed by supply constraints after Saudi Arabia and Russia announced combined additional cuts of 1.5 million bpd for August.

Sep23 ICE Brent futures were trading at $79.31/b (1800 GMT), compared to the day's range of $77.63-$79.47/b and Monday's settle of $77.69/b, while reaching levels not seen since early May.

At the same time, Aug23 NYMEX WTI was trading $74.71/b versus Monday's close of $72.99/b.

Brent had been caught in a relatively narrow band since the beginning of May, with resistance above $77.50/b and support around $71.70/b, but prices finally broke to the upside late last week.

"The question now is whether this breakout will be legitimate and whether the price can maintain its position above this support level, or whether we'll see a false breakout as we did at the end of May and the start of June," said Tomasz Wisniewski of Axiory Global.

Oil markets also found support from the lower USD as the Dollar Index this week dropped below 102 points for the first time in two months, making dollar-denominated oil imports cheaper for buyers.

Investors were also looking for Beijing's next move after the latest data revealed inflation in China slowed even further in June, with headline CPI coming in at 0%, while PPI slipped from -4.6% in May to -5.4% last month.

"If the deflationary trends continue in China, they will be forced to stimulate the economy. That should be bullish for oil," said Phil Flynn of The Price Futures Group.

However, the likelihood of a further round of US and European rate hikes continues to weigh on markets, which analysts have said will keep a lid on the immediate upside.