Today, during the Asian trading session, the WTI Crude Oil prices found themselves on the bullish track, still flashing green near the $ 43.00 level. The bullish sentiment surrounding the crude oil prices got a boost after the American Petroleum Institute (API) announced a larger-than-expected draw in the crude oil inventory. Better-than-expected US manufacturing activity data and the upbeat data from China and Japan boosted the hopes of global economic recovery, which could be considered the major key factor in supporting the oil prices. Apart from this, the reason for the oil gains could also be associated with the hopes of a coronavirus virus vaccine, which is also helping the market trading sentiment to stay positive. 

On the contrary, the modest strength of the broad-based US dollar, backed by the rosy data from the US, became the key factor that kept a lid on any further upside in the crude oil prices. Reports that OPEC production was increased by 1 million barrels per day in August could also be capping the gains. WTI Crude Oil is currently trading at 43.16 and consolidating in a range between 42.97 and 43.21.

On the data front, the US crude inventories dropped by 6.4 million barrels in the week of Aug. 28, to approximately 501.2 million barrels, against analysts’ expectations of a draw of 1.9 million barrels, as per the American Petroleum Institute (API) report. However, all investors will now keep their eyes on the US Energy Information Administration’s figures on the crude oil supply, which is scheduled to be released later in the day.

Thus, the bigger-than-expected draw in the US stockpiles and increased hopes of an economic recovery in the United States and China, after the release of robust factory data, boosted the oil prices. On the US data front, August’s ISM Manufacturing Purchasing Managers Index (PMI) increased to 56, against July’s reading of 54.2 and the forecast of 54.5. A surge in new orders showed that the index had climbed to a multi-year high. However, the upbeat data came right after optimistic manufacturing data from China and Japan, which also fueled hopes for economic recovery and lent support to the oil prices.

Another factor supporting the market trading sentiment could be the latest positive hopes of a coronavirus vaccine. It is worth reporting that pharmaceutical companies worldwide are set to do final tests, with one of the top candidates developed by AstraZeneca beginning its trials from today. In turn, this boosted the market trading sentiment and played a role in underpinning the oil prices.

The broad-based US dollar managed to erase its losses of the previous day, and started flashing green on the day, mainly due to the better-than-expected US manufacturing data, which fueled hopes of economic recovery and boosted the greenback. However, the gains in the US dollar were unaffected by the upbeat market sentiment, and they are holding their winning streak, at least for now. Thus, the modest gains in the US dollar could be considered the major factor that capped any further upside in the oil prices, as the oil price is inversely related to the price of the US dollar. Meanwhile, the US Dollar Index, which measures the greenback against a basket of 6 major currencies, had risen by 0.03%, to 92.362, by 12:33 AM ET (5:33 AM GMT). The US dollar is only likely to put further bids if the US succeeds in releasing more relief measures. 

On the contrary, the bullish sentiment surrounding the crude oil prices seems rather unaffected by the reports that OPEC production rose by 1 million barrels per day in August. This move came after the sharp drop in the fuel demand, due to the COVID-19 pandemic, which urged OPEC+ to cut production by a record 9.7 million BPD from May 1.

Looking forward, market traders are keeping their eyes on the US Energy Information Administration’s figures regarding the crude oil supply, which is scheduled to be released later in the day. In the meantime, the updates surrounding the fresh Sino-US tussle and the coronavirus (COVID-19) updates have not lost any significance. Good luck!