During Tuesday’s Asian trading session, the WTI crude oil prices failed to stop their losing streak of the previous day, taking further offers under the $ 39.00 level on the day. This was mainly due to the renewed worries over the economic recovery, after the US reported fresh COVID-19 cases over the US Labor Day long weekend. This, in turn, raised concerns that the recent recovery in demand could be halted.

In the meantime, the end of the peak driving season in the US also fueled worries regarding the oil demand, and this is keeping the oil prices under pressure. Across the pond, the geopolitical tensions between China and some notable countries, like the US and India, also contributed to the losses in the oil price. Meanwhile, the bullish bias of the board-based US dollar, which was triggered by the hopes surrounding the US stimulus package, also became the key factor that kept the oil prices under pressure. At the moment, crude oil is trading at $ 39.06 and consolidating in the range between 38.91 and 39.33.

On the US-China front, the rising tensions between the United States and China continued to pick up pace. It is worth recalling that President Trump earlier imposed punitive measures on the Asian major. As a result, China announced new visa restrictions, to counter the Trump administration’s action against China. Another factor that could be fueling the tension could be the fresh headlines suggesting that the US appears to be ready to ban some or all products made with cotton from China’s Xinjiang region.

This most recent ban is likely to be imposed on the day, in response to the use of forced labor by minority Muslims, as per the New York (NY) Times report. Thus, these negative headlines could intensify Sino-American trade tensions once again, as the diplomatic relations between the two countries is already suffering due to many issues. This, in turn, exerted downside pressure on oil prices.

Apart from this, the fears of rising numbers of COVID-19 cases in the US, Australia, Japan and some notable Asian nations, like India, are continually fueling worries that the economic recovery could be halted. As per the latest report, India, 22 US states and the UK recently reported a rise in cases. The total number of cases globally crossed the 27.2 million mark as of September 8, as per the Johns Hopkins University data.

Another factor weighing on the oil prices could be a recent report that suggests the end of the peak US driving season, which will eventually squeeze the demand for fuel. Moreover, the upcoming maintenance season for US refineries is likely to cut crude demand by 1.5 million to 2 million barrels per day, which will also put pressure on the oil prices.

On the USD front, the broad-based US dollar extended its bullish bias, taking some bids on the day, probably due to the slow progress on the COVID-19 stimulus package. The gains in the US dollar were further supported by Friday’s US job data, which showed a decline in the unemployment rate and a rise in US Treasury yields. However, the gains for the US dollar could also be a key factor that has kept the crude oil prices down, as the price of oil is inversely related to the price of the US dollar. Meanwhile, the US Dollar Index, which tracks the greenback against a basket of other currencies, had risen by 0.13%, to 93.168, by 9:53 PM ET (2:53 AM GMT).

On the contrary, the crude oil prices seem rather unaffected by the hopes of the US stimulus package. Neither did the optimism over a potential vaccine/treatment for the highly infectious coronavirus manage to push the crude oil bulls. In the absence of any major data/events on the day, the market traders will keep their eyes on the movement of the USD. The risk catalysts, such as geopolitics and the virus woes, not to forget the Brexit, will be key to watch for the fresh direction. Good luck!