Crude Oil Fails to Halt the Overnight Bearish Bias, Despite the Weaker US Dollar – A Quick Outlook! - Forex News by FX Leaders

Crude Oil Fails to Halt the Overnight Bearish Bias, Despite the Weaker US Dollar – A Quick Outlook!

Posted Tuesday, November 3, 2020 by
Arslan Butt • 3 min read

During Tuesday’s early Asian trading session, the WTI Crude Oil price failed to put a stop to its previous declining streak, remaining depressed at around the $ 37.00 level on the day, as more European countries announced lockdown restrictions, amid the surging numbers of COVID-19 cases in Europe and the US, which in turn put pressure on crude oil prices. Apart from this, the delay in the US COVID-19 aid package and the jitters ahead of the American presidential election are also exerting downside pressure on the crude oil prices.

Across the pond, the reason for the bearish bias in crude oil prices could also be associated with the jittery movements in all markets ahead of the US presidential election on Tuesday. Moreover, the declines in the crude oil prices were further bolstered after a further increase in Libya’s oil production, which eventually raised fears of oversupply and undermined the crude oil prices. Let me remind you that Libya’s crude oil production has risen to 800,000 BPD. On the contrary, the upbeat activity data from the US, China and Europe have fueled hopes of economic recovery, which has been a key factor that has helped to limit deeper losses in the crude oil prices.

Besides this, the losses in crude were also capped by the increased odds of a soft Brexit, which kept the market trading mood positive and undermined the safe-haven US dollar. So, the weakness in the US dollar could also be considered one of the key factors that is helping the crude oil prices to challenge the bearish bias, as the price of oil is inversely related to the price of the US dollar. At the moment, crude oil is trading at $ 36.69, and consolidating in the range between 36.63 and 37.31.

The fears of rising numbers COVID-19 cases, in the US, Europe and some of the notable Asian nations, is continually fueling worries over economic recovery, which in turn has undermined the crude oil prices. As per the latest report, Europe declared a second round of lockdowns this weekend, amid surging numbers of coronavirus cases. It is worth recalling that the market and industry professionals were not expecting renewed lockdowns for entire countries. Late last week, Austria announced a second lockdown until the end of November, which included the closing of hotels for tourism, and of restaurants, except for takeaway and delivery business.

Apart from all of this, the UK, one of the largest economies in Europe, is also imposing lockdown restrictions, while Belgium has also returned to a nationwide lockdown. The intensified lockdown restrictions in Europe have put pressure on the crude oil prices, with traders are also looking towards the outcome of the US election.

Moreover, the declines in the crude oil prices were further bolstered after Libya’s oil production increased further, which eventually raised fears of oversupply and undermined the crude oil prices. As per the latest report, Libya’s crude oil production has hit 800,000 BPD. The reports further added that this is a 100,000-BPD increase in just a few days. Libya began to boost oil production in late September, when the Libyan national Army agreed to a ceasefire with the Government of National Accord, and eased its blockade of oil facilities. Despite the worsening coronavirus (COVID-19) situation and the delay in the US COVID-19 stimulus package, the market trading sentiment has been flashing green since the Asian session started, backed by the upbeat activity data from the US, China and Europe, which eventually rekindled hopes of economic recovery and became one of the key factors that is helping to limit deeper losses in the crude oil prices. Besides this, the losses in crude were also capped by the increased odds of a soft Brexit, which boosted the positive mood on the markets and undermined the safe-haven US dollar.

Despite the upbeat US data, the broad-based US dollar failed to gain any positive traction, remaining depressed on the day, amid a risk-on market sentiment. However, the losses in the greenback could also be associated with the worsening coronavirus (COVID-19) situation in the US and the on-going jitters ahead of the American presidential election, all of which reflect the fears of an economic slowdown. Thus, the losses in the US dollar could also be considered as one of the key factors that is helping the crude oil price to challenge its bearish bias, 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, has dropped to 93.977.

On the contrary, the positive talks between the UK and the European Union over Brexit, have become one of the key factors that has helped to limit deeper losses in the crude oil prices. As per the latest report, the Brexit talks have finally started flashing positive signals, which in turn, is helping to limit losses in terms of the market trading sentiment.

In the absence of any major data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the US elections and updates about the US stimulus package. In the meantime, the risk catalysts, like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for fresh direction. Good luck!

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
Comments
0 0 vote
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments