During Tuesday’s Asian trading session, the WTI Crude Oil prices failed to maintain their early-day gains, dropping to 41.39 from the 41.93 level, mainly due to the mixed market sentiment, which recently underpinned the broad-based US dollar, resulting in continued oil declines.

The intensifying coronavirus woes and US-China tensions also weighed on the crude oil prices. However, the hopes that the US will pass another stimulus bill became one of the major factors that helped to limit the downside bias for oil prices. On the other hand, fears of an escalation in global geopolitical tensions were also triggered when reports came in about the recent blast in Iraq, and the North Korean leader’s praise for nuclear weapons, which recently benefited the oil prices. However, the prices are stuck within a narrow range, as the COVID19 situation in the US has offered some uncertainty over the prospects of a recovery in demand, while the announcement by the University of Oxford, regarding a vaccine, provided support and optimism in the market. Crude oil is trading at $ 41.58 and consolidating in the range between 41.39 and 41.93.

The fears of slowing demand, due to coronavirus (COVID19) woes, kept oil traders cautious. As per the latest report, the coronavirus has affected almost 16.30 million people globally, while, as per the Johns Hopkins University, almost 650,000 of those people have died so far. On the US front, the number of coronavirus cases in California rose by at least 10,549 on Monday to a total of 463,439, pushing it above the Massachusetts record for the total number of COVID19 deaths. Australia’s second-most populous state of Victoria also reported 384 new cases on the day vs. the previous day’s surge of 532. In contrast, New Zealand has reported zero new cases of Covid19 for the 3rd day in a row. Considering the current coronavirus situation, Hong Kong has recently re-imposed restrictions.

Apart from virus woes, the investors’ cautious sentiment could also be associated with the reports of the long-lasting US-China tussle, which is picking up pace continuously. The two countries ordered the closure of the opposite state’s consular offices in their respective countries, namely China’s Houston consulate and the US consulate in Chengdu. However, the tensions mounted even further, after the Trump administration sent more planes to keep an eye on China.

On the positive side, the hopes that the US will pass another stimulus bill cheered investors and boosted stock and oil prices. The US Senate Republicans introduced a $ 1 trillion COVID19 aid package, that includes payments of $ 1,200 to US citizens and incentives for the manufacturing of personal protective equipment in the United States, rather than in China. It is worth mentioning that this package also includes $ 190 billion in loans for small businesses and $ 100 billion in loans to businesses that operate seasonally or in low-income areas. However, these hopes kept the equity market positive on the day.

Despite the risk-on market sentiment, the broad-based US dollar succeeded in stopping the deeper losses of earlier in the day, and started to report gains. However, the modest gains in the US dollar kept the oil prices down, as the price of 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, recovered by 0.04%, to 93.773.

Looking forward, the market players will keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum for oil. Today’s private stockpile data from the American Petroleum Institute (API), before 7.54 AM, will be key to watch. In addition, the US stimulus progress will be closely observed, ahead of the US Federal Reserve (Fed) monetary policy decision, which is due to happen on Wednesday. Good luck!