During Tuesday’s Asian trading session, the WTI crude oil prices managed to extend their strong overnight bullish moves and remain bullish around the $ 39.50 level, mainly due to the weaker US dollar and the positive risk sentiment, instantly improving the mood of oil traders and investors. However, the market trading sentiment got an additional boost when US President Donald Trump returned to the White House from the hospital, after having been admitted for treatment for the coronavirus last Friday.
This, in turn, undermined the haven demand for the greenback, and contributed to the gains in crude oil, as the price of oil is inversely related to the price of the US dollar. It is worth recalling that the crude oil prices dropped sharply last Friday, when Trump went into the hospital, but the losses were short-lived, due to his fast recovery. Across the pond, the gains in the crude oil prices were further bolstered by the renewed hopes that a deal could be agreed for a US economic stimulus package to control the impact of the coronavirus. Meanwhile, the increasing industrial action by Norwegian oil workers has reduced the country’s output by 330,000 barrels per day (BPD), which is also keepings the oil prices bullish.
Furthermore, the sentiment surrounding the crude oil prices was further bolstered by the reports suggesting that the Norwegians are considering cutting 10,000 jobs, bringing down production levels for the oil giant. On the contrary, the fears of fresh lockdown restrictions in the UK and Europe, in the wake of the resurgence of the coronavirus, have become the key factor that is keeping a lid on any additional gains in the crude oil prices. WTI Crude Oil is currently trading at 39.35, and consolidating in the range between 39.11 and 39.50.
The market trading sentiment extended its positive performance of the previous day, still flashing green on the 2nd day of trading. However, the market trading sentiment got a boost when US President Donald Trump returned to the White House, after being discharged from the hospital. He was admitted for treatment for the COVID-19 virus last Friday. In the meantime, the renewed hopes for the US economic stimulus package also favored the market trading sentiment, supporting the oil prices, and across the pond, the rising odds of a soft Brexit exerted a positive impact on the market trading sentiment too, contributing to the gains in oil.
As a result of the risk-on sentiment, the broad-based US dollar failed to erase its losses of the previous day, remaining depressed on the day, mainly due to the risk-on tone of the market. Apart from this, the resurgence of the coronavirus in the US fueled fears that the economic recovery could be halted, which is also keeping the greenback under pressure. However, the losses in the US dollar could be considered the major factor that has 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 Futures, which tracks the greenback against a basket of other currencies, has dropped to 93.457.
On the contrary, the global death toll from the COVID-19 pandemic continues climbing, having surpassed 1 million last week, with the number of cases rising above 35 million, which tends to fuel fears that global economic recovery could grind to a halt. These fears could be considered as one of the key factors that is keeping a lid on any additional gains in crude oil prices.
Looking forward, the market traders will be keeping their eyes on the crude oil supply data from the American Petroleum Institute (API), which is due later in the day. In the meantime, the updates surrounding the fresh Sino-US tussle, and the coronavirus (COVID-19) problems, have not lost any significance. Good luck!