The WTI crude oil prices are flashing green. They managed to maintain the previous day’s modest gains on around the $40.50 level, while representing gains of 0.18%. Most of the profits were encountered mainly after the sharp drop in US crude inventories, which bolstered investor confidence regarding the oil demand. On the other hand, the fears that OPEC+ might, in an upcoming meeting, ease output cuts as of August, became key factors that have capped the upside momentum in crude oil prices.

Elsewhere, the modest gains in crude oil prices could also be attributed to the weakness of the broad-based US dollar, triggered by the upbeat market sentiment. However, the fears of geopolitical tensions between the US and the rest of the global economies, like the European Union (EU), the UK and China, is also challenging the upside of crude oil. At the moment, WTI crude oil is trading at $40.38 and consolidating in the range between $40.37 and $40.85.

On the data front, the American Petroleum Institute (API) estimated an 8.322 million-barrel draw for July 10. The draw was bigger than the analyst forecasts of a 2.1 million barrels, and it reversed the previous week’s two million-barrel build. Put simply, the US crude inventories dropped by 8.3 million barrels in the week to July 10, smashing analysts’ expectations of a decline of 2.1 million barrels.

The OPEC+ group of producers are expected to step back from the large production cut plans that have been in place for a couple of months, which also added bearish pressure to oil prices, keeping the traders cautious until the announcement of the final decision. However, the easing of output cut plans by OPEC+ could be associated with the reports of the latest upbeat API Crude Oil Inventories and the IEA demand forecast for 2020.

On the positive side, the market traders cheered the optimism concerning a COVID-19 vaccine, which was triggered after the upbeat signals form Moderna and US President Donald Trump, concerning the COVID-19 vaccine. As per the keywords, “Moderna’s potential vaccine to prevent Covid-19 produced a “robust” immune response in all 45 patients in early stage human trials, providing more promising data that the vaccine may provide some protection against the coronavirus, according to newly released data published Tuesday evening in the peer-reviewed New England Journal of Medicine.” This news regarding the virus vaccine exerted a positive impact on crude oil prices.

On the coronavirus front, the COVID-19 situation continues to worsen globally. As in result, California Governor, Gavin Newsom, has recently ordered the re-imposition of social-distancing measures across the largest US state. Meanwhile, the most populous state’s two largest school districts, in Los Angeles and San Diego, have also decided only to teach online when classes resume in August. Apart from the US, the Japanese Minister of Economy, Yasutoshi Nishimura, said that his government might declare a state of emergency if the infection rate continued to increase. The ever-increasing coronavirus fears are seen as a critical factor that has capped further gains in crude oil.

Apart from the Virus woes, the US-China tussle is picking up further pace due to the intensifying differences among the two nations over trade and national security laws in Hong Kong. While speaking at the Rose Garden news conference, US President Donald Trump said that he would end the preferential treatment of Hong Kong, to punish China for what he called its “oppressive” actions against the people of Hong Kong. Trump also warned China, saying: “We can impose massive tariffs on China if we desire.” This statement challenges the risk-on market sentiment, whereas the updates concerning China-US relations might not lose their significance, and they could have a major influence on the US crude oil prices today. Good luck!