⚡Crypto Alert : Altcoins are up 28% in just last month! Unlock gains and start trading now - Click Here

WTI Fails to put any Bids, Despite the Upbeat API Weekly Crude Oil Report and the Blast in Beirut!

Posted Wednesday, August 5, 2020 by
Arslan Butt • 3 min read

The WTI Crude Oil prices failed to cheer the multiple supporting factors, and continued to trade in a sideways pattern, near the $ 41 level, ignoring significant declines in private inventory data. On the other hand, the overnight blast in Lebanon also failed to support the buying of crude oil, amid continuous delays in the US stimulus plan.

In the meantime, the weakness of the broad-based US dollar, in the wake of the US coronavirus crisis, has become the key factor that has helped to limit deeper losses in the crude oil prices. Apart from this, the on-going tension between the US and China, over TikTok, and the coronavirus woes, have also added a burden on the crude oil prices and contributed to the oil losses. At the moment, crude oil is trading at $ 41.65 and consolidating in the range between 41.47 and 41.73. However, the crude oil traders seemed cautious to place any strong positions, ahead of the weekly official Crude Oil Stocks Change from the Energy Information Administration (EIA).

On the American Petroleum Institute (API) data front, the Weekly Crude Oil Stock draw of 8.587 million barrels per week ended on July 31. These inventory figures from the industry player slipped below the previous -6.829 million barrels of a draw.

On the US-China front, the rising tensions between the United States and China continued to pick up pace after US President Donald Trump banned the Chinese app, TikTok, in the US, stating that if the dragon nation wanted to re-activate the app in America, the owner of the app would have to be American. This tit-for-tat response from both nations could be headed for a total breakdown of relations, which would hurt the trade deal that exists between the two countries.

On the other hand, the on-going uncertainty over the fiscal package also weighed on the risk-tone and contributed to the oil losses. Notably, the United States policymakers keep struggling to provide any clear details of the much-awaited stimulus plan, despite the expiry of unemployment claims benefits last week. However, these concerns are getting worrisome, as the senators have not yet shown any sign of reaching an agreement over the trillion-dollar plan, despite moving closer to the recess. The Democrats are willing to offer $ 3.5 trillion in aid, while the Republicans refuse to support anything more than $ 1.0 trillion.

The crude oil price is trading with bearish sentiment, amid fears of rising COVID-19 cases in the US, Australia, Japan and some of the major Asian nations, like India, and this has fueled worries that the economic recovery could be stopped in the wake of the resurgence in coronavirus cases. As per the latest report, the United States reported more than 1,000 new COVID related deaths on Tuesday for the 9th day in a row. The state of Queensland in Australia also decided to close its border to New South Wales today, to stop the second wave of COVID-19, which has dampened investor hopes of recovery in the fuel demand, contributing to the oil losses.

The recent blast in Lebanon put some pressure on the oil bulls, with reports of the loss of over 70 lives and more than 3,700 injuries. But these moves can also be linked to the global oil producers’ recent increase in the output. After the blast, US President Donald Trump added fuel to the fire/flames, stating that it had been an attack, and this initially weighed on the risk sentiment, contributing to the oil losses.

On the USD front, the broad-based US dollar took the offer on the day, as the United States still faced virus woes, which eventually destroyed hopes for a quick economic recovery, witnessed by yesterday’s downbeat US job data. However, the losses in the US dollar helped the oil prices to stay higher, as the price of oil is inversely related to the price of the US dollar. Meanwhile, the US Dollar Index, which tracks the US dollar against a basket of other currencies, dropped by 0.09%, to 93.148, by 10 AM ET (3 AM GMT).

The market players will keep their eyes on the weekly official Crude Oil Stocks Change from the Energy Information Administration (EIA). The forecast view shows that the recovery in stockpile draws, from 10.612 million barrels to 3.267M during the week, ended on July 31. On the other hand, the US ADP Employment Change and the ISM Non-Manufacturing PMI will be key to watch. In the meantime, the updates on the virus and the Sino-American tensions have not lost any significance. Good Luck!  

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments