WTI Flashing Mixed Signals – Coronavirus Cases Fuel Fears over Fading Demand!
The WTI crude oil prices are still directionless and flashing mixed signals at around the 40.60 level, mainly due to the worries over demand
Today, in the Asian trading session, the WTI crude oil prices are still directionless and flashing mixed signals at around the 40.60 level, mainly due to the worries over demand recovery, triggered by the growing fears of a resurgence of the coronavirus. On the other hand, the risk-on market sentiment, backed by multiple reasons, initially gave some support to the crude oil prices. The broad-based weakness of the US dollar also helped limit any additional losses for crude oil prices. At the time of writing, the crude oil prices are currently trading at 40.60 and consolidating in the range between 40.25 and 40.63.
West Texas Intermediate Crude (CLc1) was at $40.42, down 23 cents or 0.6%, from its previous settlement on Thursday. In the US, on the coronavirus front, almost 15 states in the US have reported a record hike in new cases of COVID-19, which has infected approximately 3 million people in the U.S. and killed about 130,000 so far. It is worth mentioning that Texas has registered the record high coronavirus figures for seven consecutive days. Moreover, there has been no progress with regard to a vaccine for the virus.
As a result, the oil traders seemed cautious, due to the heightened doubts about the recovery of the fuel demand from the top oil consumer. However, the reason for the market’s upbeat performance could be attributed to the upbeat employment data from the U.S. and China’s services PMI figures. The American traders had a very short time to benefit from employment figures for the month of June, before shutting down for the Independence Day holiday.
On the other hand, the U.S. aircraft carrier exercise in the South China Sea has also challenged the current risk-on sentiment. In the meantime, the ongoing India-China tensions and no major progress on the virus vaccine have also exerted some downside pressure on the market mood. Apart from this, Iran also continued to flash the early signals of worries.
On the USD front, the broad-based US dollar failed to extend its previous gains and edged lower on the day, mainly due to the lack of safe-haven demand in the market, backed by the upbeat key data from the US and China. Meanwhile, the investors cautiously withdrew their money from the safe-haven asset, due to the optimism over the US services sector activity data due to be released later in the day. However, the losses in the US dollar became the key factors that kept a barrier on any additional losses in the oil prices, as the price of crude oil is inversely related to the price of the U.S. dollar. At the same time, the U.S. Dollar Index Futures, which tracks the greenback against a basket of other currencies, had slipped by 0.37% to 96.940, by 12:29 AM ET (5:29 AM GMT).
The market traders will keep their eyes on the US ISM Non-Manufacturing PMI for June, with an expected 49.5 against the previous 45.4. This data could negatively affect the precious metal prices if it comes in above the 50.00 mark. However, the market should be more active today, as U.S. traders return to their desks after a long week comprising Friday’s Independence Day celebrations. Good luck!
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