During Monday’s Asian trading session, the WTI crude oil price failed to stop its last week’s losing streak and remained depressed around the $61.00 level. The impact of renewed lockdowns increased worries about fuel demand and contributed to the losses. It is worth recalling that crude oil prices recovered last week after positive developments concerning the coronavirus (COVID-19) vaccine, and but the gains were short-lived or temporary as the news of record-high COVID-19 cases in Europe fueled fears that demand could plunge in the short term.

Apart from this, the reason for the heavy losses in crude oil prices could also be attributed to the market downbeat sentiment, which tends to undermine higher-yielding oil. The risk-off market sentiment was being pressured by the US-China and the Iran-Saudi Arabia tussle, not to forget the Washington-Tehran and American-North Korea tensions. Furthermore, the virus woes, coronavirus (COVID-19) vaccine shortage and reflation fears also played their part in undermining the market sentiment. As a result, the broad-based U.S. dollar succeeded in gaining some safe-haven traction and edged higher on the day, which was also seen as one of the key factors that kept the crude oil prices under pressure. The price of oil is inversely related to the price of the U.S. dollar. At the moment, crude oil is trading at $61.05 and consolidating in the range between 60.62 – 61.64.

As we already mentioned, the ongoing concerns regarding the third-wave of coronavirus, which led to renewed lockdown measures throughout European countries, continuously threaten a recovery in crude oil demand. As per the latest report, the coronavirus (COVID-19) resurgence in Europe is still not showing any sign of slowing down. It keeps fueling the doubts over the economic recovery as the authorities in Europe keep announcing back-to-back restrictions over activities to curb the virus’s spread. It is worth noting that Germany is the latest country to consider extending restrictive measures, with a draft proposal calling for the current lockdown to be extended into a fifth month as the number of new COVID-19 cases surge. This, in turn, exerted downside pressure on the energy market.

As a result, the market trading sentiment has been flashing red signals since the week started. Hence, the reason for the downbeat trading mood could be attributed to the mixed signals concerning the COVID-19 and the latest chatters concerning the US-China tussle. The broad-based U.S. dollar managed to gain some bullish traction and edged higher on the day. However, the gains in the U.S. dollar become the key factor that kept the crude oil prices under pressure as the price of oil is inversely related to the price of the U.S. dollar. Meanwhile, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose 0.16% to 92.073 by 10:26 PM ET (2:26 AM GMT).

In the absence of the key data/events on the day, market traders will keep their eyes on Fed Chair Powell’s speech, which is due later in the day. In addition to this, the updates about the COVID-19 vaccine will also be key to watch. Good luck!