During Tuesday’s Asian trading session, the WTI crude oil prices failed to maintain its previous day bullish moves and dropped from the $43.23 to $42.62 level even after the OPEC+ said that the organization is in almost full agreement with production cuts in place to support the oil as the COVID-19 pandemic continues to reduce demand. The fresh risk-off market sentiment, triggered by the geopolitical tensions and U.S. Congress’ inability to reach an agreement for the U.S. latest COVID-19 stimulus package, also weighed on the oil prices. 

On the other hand, the U.S. and China’s intensifying tensions also add burden around the crude oil prices. The crude oil previous gains were supported by the downbeat U.S. dollar and hopes of a further increase in oil supplies. For the time being, the ongoing slide in the U.S. dollar turned out to be a major factor that capped further losses in crude oil. The crude oil is trading at $42.69 and consolidating in the range between 42.62 – 42.87.

At the US-China front, the rising tensions between the United States and China are still gaining market attention, as the Trump administration’s ordered to add 38 facilities from Huawei in blacklist after suspension in the bi-deal annual trade review with China. In the meantime, the Dragon Nation also criticizes the U.S. current behavior with Hong Kong Leader Carry Lam knocking the World Trade Organization (WTO) over the latest sanctions from the U.S. However; these lingering Sino-US tensions could keep crude oil prices under pressure.

Weighed on the market risk sentiment was the failure of the Democrats and Republicans to offer any latest announcement on the coronavirus (COVID-19) relief package amid political differences. Apart from this, the coronavirus concerns also keep challenging the energy traders. It should be noted that the virus fears take the front seats as the global leaders are struggling to find any medicine to the deadly virus. Whereas, the ongoing rise in the coronavirus cases in Europe threatens the future commodity demand. As per the latest report, the actual coronavirus cases increased to 225,404, with a total of 9,236 deaths so far. Whereas, the cases increased by 1,390 in Germany on the day against the previous day +738. At the same time, the death losses rose by 4, according to the report of German disease and epidemic control center, Robert Koch Institute (RKI).

Despite the risk-off market sentiment, the broad-based U.S. dollar extended its losses amid U.S. Congress’ failure to reach a agreement for the country’s latest COVID-19 stimulus package. However, the losses in the U.S. dollar become the key factor that capped further downside for the crude oil prices as the price of oil is inversely related to the U.S. dollar price. Whereas, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.22% to 92.642 by 12:21 AM ET (5:21 AM GMT).

The market players will keep their eyes on the American Petroleum Institute’s (API) Weekly Crude Oil stock. The private inventory number marked 3rd-consecutive contraction in the level with -4.4M being the previous reading. In the meantime, the updates on the virus and geopolitical tension could not lose its importance. Gold luck!