During Wednesday’s early Asian trading session, the WTI Crude Oil prices succeeded in extending their overnight gaining streak, hitting a one-week high above the mid-$ 38.00 mark, after a surprise draw of -8.01M, against the previous 4.55M, according to private inventory data published by the American Petroleum Institute (API) on Tuesday. This, in turn, boosted the crude oil prices by more than 3% overnight. Furthermore, the sentiment surrounding crude oil improved further, after reports that the Organization of the Petroleum Exporting Countries (OPEC) and its allies were maintaining the current production restrictions, which has eased oversupply fears and contributed to the improvements in oil prices.

On the contrary, the gains in crude were capped by the concerns about the escalation of the COVID-19 pandemic and the uncertainty over the outcome of the US presidential election. Apart from this, the strength of the broad-based US dollar, coupled with the concerns regarding the outcome of the US elections, has also become a key factor that has kept a lid on any additional gains in the crude oil prices. WTI Crude Oil is currently trading at 38.58, and consolidating in the range between 37.86 and 38.76.

According to the latest American Petroleum Institute data, US crude stockpiles declined sharply, by 8.01 million barrels, for the week ending October 30, against the projection of a 600,000-barrel build.  Thus, the sharp decline instantly boosted crude oil prices by more than 3% overnight. Moving on, the US Energy Information Administration (EIA) reports are scheduled for release later in the day.

On the other hand, the oil prices were further bolstered by the latest reports suggesting that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group led by Russia and known as OPEC+, are maintaining their current production restrictions, thereby easing oversupply concerns that undermine the crude oil prices. It is also worth mentioning that Algeria (holder of the OPEC presidency), Saudi Arabia and Russia are pushing to extend the supply cuts well into 2021.

Across the pond, the upbeat market tone is also supporting crude oil prices. Therefore, the risk sentiment was favored by reports suggesting that should Joe Biden win the presidency, his administration is expected to pass big stimulus packages, in an effort to boost the economy that has been so hard-hit by the COVID-19 pandemic. This has boosted the market trading sentiment and helped the riskier currencies, such as the AUD and the NZD. As per the latest report, the Democratic candidate, Joe Biden, with 85 electoral votes, leads President Donald Trump, who has 72 votes.

While Trump won in terms of electoral votes in Indiana, the first state to be decided, Democrat Joe Biden is nevertheless broadly expected to win the election. However, the race is tighter than expected, with President Trump currently ahead in his must-win state of Florida. Other battleground states are too close to call.

Despite the risk-on sentiment, the broad-based US dollar managed to keep its overnight gains, edging higher on the day, as investors turned to the safe-haven asset, since the results for the eastern states have started coming in. However, the gains in the US dollar were rather unaffected by the upbeat market mood. But the gains in the US dollar gains have become the key factor that has kept a lid on any additional gains in the crude oil prices, as the price of oil is inversely related to the price of the US dollar. In the meantime, the US Dollar Index, which tracks the greenback against a basket of other currencies, has risen to 93.898.

Elsewhere, the gains in crude were capped by the on-going fears of rising numbers of COVID-19 cases in the US, Europe and some of the notable Asian nations. This has continually fueled worries over economic recovery, and it has become a key factor that has limited any additional gains in the crude oil prices. It is worth recalling that Europe is imposing back to back lockdown restrictions amid surging numbers of coronavirus cases. Meanwhile, Austria also announced another lockdown until the end of November, which includes closing hotels for tourism, and shutting down restaurants, except for takeaways and deliveries. The UK, one of Europe’s largest economies, is also imposing lockdown restrictions while Belgium has returned to a nationwide lockdown as well.

Looking ahead, the market traders will keep their eyes on US Energy Information Administration (EIA) reports, which are scheduled for release later in the day. All in all, the updates on the Brexit, the coronavirus and the US elections will not lose any significance today. Good luck!