The long-term signal for WTI Crude Oil offered a quick 80 pips profit on Thursday; however, the market is still moving, as the fundamental side is driving volatility. During Friday’s Asian trading session, the WTI Crude Oil prices failed to extend their overnight gains, dropping to the 40.48 level, mainly due to the intensified fears of the spreading coronavirus (COVID-19) and a further delay in the US stimulus package, which is keeping the market trading sentiment under pressure and challenging the crude oil bulls. Apart from this, the prevalent, somewhat doubtful story, currently circulating the market, concerning Brexit and the recent US-China tensions, also exerted downside pressure on the crude oil prices.

Another reason for the crude oil losses could also be associated with the latest reports suggesting that the Organization of the Petroleum Exporting Countries (OPEC) has decided to ease supply cuts, despite a rapidly falling fuel demand in Europe and the US, amid rising numbers of COVID-19 cases in both regions. It is worth recalling that the rising number of coronavirus cases has caused some European countries to implement restrictive measures, such as lockdowns and curfews, which in turn have weakened the fuel demand and contributed to the declines in oil.

On the contrary, the official upbeat inventory data by the US Energy Information Administration (EIA) failed to provide any meaningful support to the oil buyers, and this could be considered the key factor that is helping to limit deeper losses in the oil prices. In the meantime, the prevalent weakness of the broad-based US dollar has also turned out to be a major factor that is helping to limit losses in oil, as the price of oil is inversely related to the price of the US dollar. At the moment, crude oil is trading at $ 40.63 and consolidating in the range between 40.48 and 41.31.

On the data front, the US Energy Information Administration (EIA) showed a 3.818 million-barrel draw in crude oil supplies for the week ending October. 9, which was more than the expected draw of 2.835 million barrels and the previous week’s 501,000-barrel build. Simultaneously, the American Petroleum Institute reported a 5.422 million-barrel draw in supplies the day before. However, this upbeat data failed to provide any meaningful support to the oil buyers, but it could be considered the key factor that is keepeing oil losses in check.

However, the market trading sentiment failed to stop its losing bias of the past three days, remaining depressed on the day. This could be attributed to the long-lasting disappointment over the lack of progress on the much-awaited fiscal package. The US Democratic Party leaders have still not reached an agreement with the Republicans on the package figures. Apart from this, the intensifying US-China tussle also kept the market trading sentiment under pressure. Moreover, the record weekly rise in coronavirus infections in Europe could be considered one of the key factors that has kept the market sentiment under pressure. In the meantime, the fears of a no-deal Brexit also played a major in undermining the market trading sentiment, which undermined the crude oil prices, in turn.

As per the latest report, US President Donald Trump tried to placate traders during the “town hall” discussions, saying that House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin are “going to go” over the US stimulus relief bill. Apart from this, Speaker Pelosi also stated that stimulus relief could not wait until January.

On the other hand, the intensifying tensions between the US and China also added a further burden to the crude oil prices. Tensions were fueled after China aggressively warned the US to withdraw from the Taiwan Strait. However, these lingering Sino-US tensions keep challenging the risk-on market sentiment, contributing to the losses in oil.

On the coronavirus front, the numbers of COVID-19 cases are not showing any sign of slowing down, especially in the UK and Europe, which has caused some European countries, like the UK and France, to impose restrictive measures, such as lockdowns and curfews, starting from today. Meanwhile, the US Midwest is also reporting growing numbers of cases as the temperature drops. This, in turn, has weakened the fuel demand and exerted an extra burden on crude oil prices.

Despite the rising number of COVID-19 cases and the lack of progress by US Congress, in terms of passing the latest stimulus measures, ahead of the November 3 presidential election, the broad-based US dollar failed to put any haven bids, remaining depressed on the day, possibly due to the doubts over the US economic recovery, which tends to undermine the greenback. The losses in the US dollar have become the key factor that is helping to limit deeper losses in the the oil prices, as the price of oil is inversely related to the price of the US dollar. Simultaneously, the US Dollar Index, which tracks the greenback against a basket of other currencies, inched down by 0.02%, to 93.798. In the absence of any major data/events on the day, the market traders will keep their eyes on the Retail Sales for September and the Michigan Consumer Confidence for October. Meanwhile, the USD moves and coronavirus headlines will also be closely followed, as they play a key role in crude oil. Good luck!