Today, during the Asian trading session, the WTI Crude Oil prices were flat, at around the mid-$ 42.00 level, due to the mixed headlines surrounding the market. Whether it was because of production cuts on the US Gulf Coast or the world’s first case of COVID-19 reinfection in Hong Kong, the investors seemed confused on the day. However, the sentiment surrounding crude oil was slightly improved, since the week started in the wake of the OPEC+ promise to keep oil production levels at the fixed amount of 7.7 million barrels per day (BPD). In the meantime, the sentiment surrounding oil was further bolstered after oil production in the Gulf of Mexico was cut by half, due to storms. But oil prices failed to maintain their previous gains, and started to flash red on the day, possibly due to rising numbers of coronavirus cases in Asia and Europe.
On the contrary, the risk-on market sentiment, backed by hopes of a new COVID-19 treatment and fresh optimism on the US-China trade front, helped to limit deeper losses in the crude oil prices. In the meantime, the fresh weakness of the broad-based US dollar, triggered by an upbeat market sentiment, is also keeping the oil losses limited. At the moment, WTI Crude Oil is trading at 42.58 and consolidating in the range between 42.38 and 42.61.
As we all well aware, the producers moved to cut production at Gulf Coast oil refineries yesterday, as the double-whammy of hurricane Marco and tropical storm Laura threatened the area, forcing the shutting down of production of 1.5 million barrels per day (BPD), or 82% of the area’s offshore crude oil output. However, the positive news no longer had any impact on the oil prices. The jump in the US rig count last week and mixed data on COVID-19 infections are having a muted, bearish effect on oil this week.
Despite the multiple supporting factors for crude oil, oil traders failed to cheer them, possibly due to the world’s first case of COVID-19 reinfection in Hong Kong. As per a report by the University of Hong Kong (HKU), the man, who is in his 30s, was reinfected with the coronavirus four months after his initial infection. This world’s first case of reinfection has fueled fears over recovery of the oil demand, and kept the traders cautious.
On the other hand, the upbeat market tone, backed by a combination of other factors, tends to help limit deeper losses in the oil prices. The risk sentiment was favored by the hopes of a new coronavirus remedy, which was approved by the US Food and Drug Administration, for the treatment of COVID-19 patients with anti-body containing blood plasma from patients who have recovered from the virus. The latest positive news over the US-China trade talks also played a positive role in the trading sentiment, and this could boost oil prices. Good luck!