During Monday’s Asian trading session, the WTI crude oil prices failed to gain any positive traction and dropped to around the $40.21 level, while representing declines of 1.01%. It was mainly driven due to the risk-off market sentiment, backed by the intensifying virus woes, which prompted demand growth concerns, and as a result, global production is set to rise.

On the other hand, the reason behind the oil prices declines could also be attributed to the geopolitical tensions between the US and the rest of the global economies, like the European Union (EU), the UK and China, which also exerted some downside pressure on crude oil prices. The broad-based US dollar’s bullish bias in the wake of a downbeat trading sentiment also kept the oil prices bearish. At the moment, crude oil is trading at $40.36 and consolidating in the range between 40.21 and 40.81.

However, the long-lasting pandemic (coronavirus) continued to reduce the oil demand from some of the biggest oil consumers. As per the latest report, the United States leads the world figures with 3,739,726 cases and 140,294 deaths, as per the figures by John’s Hopkins University. The number of cases of COVID-19 in the US rose by 2.1%, in-line with the daily average of the past week. More specifically, Texas reported 10,158 new COVID-19 cases, bringing the figure to 317,730 so far, the fourth-highest in the nation.

Florida has become the latest epicenter for the virus; they reported 12,478 new virus cases, the fifth day in a row with more than 10,000 cases, and 89 deaths over the past 24 hours, on Sunday. Meanwhile, the number of cases of COVID-19 around the world is closing in on 14.5 million, and more than 600,000 have died as per the latest report.

 
Apart from the virus woes, the US-China dispute was on the cards, due to the recent differences between the US and China over trade matters and Hong Kong’s national security laws, which initially weighed on the risk sentiment. As a result, the S&P 500 futures are down 0.36%, and pushing the safe-haven dollar higher.

On the USD front, the broad-based US dollar extended its early-day bullish moves, as investors turned to the safe-haven in the wake of an intensified tussle between the US and China, coupled with virus woes. However, the gains in the US dollar kept crude oil lower, as the price of crude oil is inversely related to the price of the US dollar. Meanwhile, the US Dollar Index, which tracks the greenback against a basket of other currencies, gained 0.23%, rising to 96.112 by 12:01 AM ET (5:01 AM GMT). But, the early signals of massive aid package during this week’s announcements about the fiscal stimulus, combined with the positive results of the much-championed drug Remdesivir, kept a lid on any additional oil price losses.

On the other hand, OPEC+’s recent decision to boost supplies by 2 million barrels per day could also be hurting the crude oil prices. The cartel forecast that the oil demand would grow, compensating for the increased supply. However, the positive demand forecast has failed to provide any support for the oil prices so far.

Summing up, the oil prices continue bearish trading on the back of the fundamentals discussed above. Today, in the absence of the major data/events to be released on the day, the market traders will keep their eyes on USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum. Furthermore, the decision by the European Union (EU) summit, where policymakers are divided over the much-awaited stimulus, will be key to watch. Good luck!