The WTI crude oil prices flashed green, but lost some of their early-day gains, possibly due to the ongoing doubts over the recovery of the fuel demand, as the number of coronavirus cases is still not showing any signs of slowing down. However, the sentiment surrounding crude oil improved somewhat, after OPEC+ promised, on Friday, to keep oil production at the fixed level of 7.7 million barrels per day (BPD). 

On the other hand, the gains in the crude oil prices were further bolstered after oil production in the Gulf of Mexico was cut by half, amid storms. On the other hand, the risk-on market sentiment, backed by hopes of new COVID-19 treatment, also gave crude oil traders confidence and helped the oil prices to remain bullish. In the meantime, the fresh weakening of the broad-based US dollar, triggered by the upbeat market sentiment, also impressed the oil bulls and kept the oil prices on the upside. 

On the contrary, the US-China tussle and intensifying numbers of coronavirus cases worldwide turned out to be a significant factor that capped the further upside for crude oil. WTI Crude Oil is currently trading at 42.55 and consolidating in the range between 42.23 and 42.70.

It is worth recalling that the crude oil prices were supported by the OPEC+ commitment to keep oil production levels at 7.7 million barrels per day (BPD). The members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil states, including Russia, pumped volumes that exceeded the supply targets from May to July, and as a result, they will need to cut output by over a million barrels per day for two months, in order to compensate.

On the other hand, the oil prices were further bolstered by the latest reports that US oil production was facing a shutdown, as the double-trouble pair of storms, Marco and Laura, wreaked havoc in the Caribbean and the Gulf of Mexico over the weekend. Notably, the producers closed down almost 58% of the Gulf’s offshore oil production and 45% of the natural gas supply at the weekend.

On the other hand, the upbeat market tone also supported the oil prices, due to the weakening safe-haven US dollar. The risk sentiment was favored by the hopes of a new coronavirus remedy, to be approved by the US Food and Drug Administration, for the treatment of virus patients with blood plasma from recovered coronavirus patients, as an antibody therapy. However, this method of treatment has only been approved in case of an emergency. 

On the contrary, Iraqi Oil Minister Jabbar Alluaibi recently said that the country is producing 5 million barrels of oil per day (BPD), and that production could increase to 7 million BPD by 2025. However, this news joined the downbeat demand forecasts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies – the group known as OPEC+ – to provide support for the oil prices.

On the USD front, the broad-based US dollar failed to maintain the positive early-day momentum, edging lower on the day, as doubts over the US economic recovery remain, due to the coronavirus crisis. The losses in the US dollar could also be attributed to the uptick in the US stock futures. 

The declines in the US dollar kept the oil prices higher, as the price of oil is inversely related to the price of the US dollar. Meanwhile, the US Dollar Index, which tracks the USD against a basket of other currencies, was down by 0.09%, to 92.692, at 10:13 PM ET (3:13 AM GMT).

Elsewhere, the crude oil gains were also capped by renewed doubts over the US stimulus package, and it is worth mentioning that US policymakers have not given any fresh clues regarding the US stimulus package. However, the hurdles caused by the delays in terms of the package were intensified further after House Speaker Nancy Pelosi took a U-turn from her previous willingness to cut the demands in half.

In the absence of any major data/events on the day, the market traders will focus on the upcoming speech of US Federal Reserve Chairman Jerome Powell, at the Jackson Hole symposium on Thursday. The movement of the USD and coronavirus headlines will also be followed closely, as they could play a key role in the oil prices. Good luck!