During Monday’s early Asian trading session, the WTI Crude Oil prices failed to stall its losses of Friday, remaining bearish at around the $ 40.00 level, mainly due to the persistent concerns over the renewed lockdown measures in the United States and Europe, which eventually fueled concerns of a slower recovery in the fuel demand, dragging the crude oil prices lower. In addition to this, the release of the Baker Hughes report, which showed that the number of US oil rigs rose for the 6th consecutive week, has become one of the key factors that has kept the crude oil prices under pressure.

Apart from this, the anticipation of a rise in the Libyan crude supply also played a major role in undermining crude oil prices. On the contrary, the positive remarks by Russian President Vladimir Putin, about extending the OPEC+ output cuts, helped to limit deeper losses in the crude oil prices. In the meantime, the weakness of the broad-based US dollar, triggered by the market risk-on mood, also became the key factor that kept a lid on any additional losses in the crude oil prices, as the price of oil is inversely related to the price of the US dollar. At the moment, WTI Crude Oil is trading at 39.75 and consolidating in the range between 39.58 and 40.91.

Regarding the major reason behind the decline in the crude oil prices, the first thing that comes to mind is the fears of renewed lockdown restrictions, in an attempt to stop the second wave of the coronavirus, which has ultimately fueled concerns over the slower recovery in fuel demand and undermined the oil prices. The United States reported a record-high number of new coronavirus cases over the weekend, which in turn raised concerns among health experts, that the nation could be in for a difficult winter. As per the latest report by Johns Hopkins University, the country reported approximately 83,700 new COVID-19 cases over the weekend.

Apart from this, the reason for the bearish bias surrounding the crude oil prices could also be associated with the reports that are suggesting a rise in the Libyan crude supply. It is worth mentioning that Libya’s National Oil Corp (NOC) has increased force majeure on exports from the ports of Es Sider and Ras Lanuf. At the same time, the output will reach 800,000 barrels per day (BPD) within two weeks and 1 million BPD in four weeks.

Across the pond, the losses in the crude oil prices were further bolstered after Baker Hughes reported that, last week, US oil and gas rigs increased to their highest level since May. It is worth recalling that the US oil drillers added 6 new rigs, increasing the total count to 211, in their 6th consecutive increment since having bottomed out in mid-August. Thus, the crude oil producers seem to be restoring their production, which closed down during the first wave of the coronavirus.

On the contrary, the positive remarks by Russian President Vladimir Putin, about extending the OPEC+ output cuts, helped to limit deeper losses in the crude oil prices. The Russian President announced last week that Russia sees no need for now, for global oil producers to change their existing agreement over the global supply. They reserve the right to keep existing restrictions on production, and not remove them as quickly as they had planned to do earlier. This, in turn, became the key factor that provided temporary relief to the market.

On the USD front, the broad-based US dollar failed to stop its declining streak of last week, remaining depressed on the day, amid a prevalent risk-on market sentiment. Moreover, the losses in the US dollar could also be associated with the on-going optimism over the US Congress passing the latest stimulus measures before the Nov. 3 presidential election, which tends to undermine the safe-haven US dollar. However, the losses in the US dollar 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, which tracks the greenback against a basket of other currencies, dropped to 92.722. In the absence of any major data/events on the day, the market traders will keep their eyes on the movement of the USD and coronavirus headlines, which could play a key role in the crude oil prices. Good luck!