During Thursday’s early Asian trading session, the WTI Crude Oil price managed to extend its recovery rally of the previous day. Crude took some further bids above the $ 39.00 mark, after the Energy Information Administration reported that crude oil inventories in the United States had dropped by 8 million barrels last week, which eased concerns about the oversupply and provided some support for the crude oil prices. This data came after the American Petroleum Institute estimated an 8-million-barrel draw, which initially boosted the crude oil prices.

Apart from this, the bullish sentiment surrounding crude oil prices was further bolstered by the reports suggesting that the Organization of the Petroleum Exporting Countries (OPEC) and its allies are still considering the idea of delaying planned increases in output. Across the pond, the weakness of the broad-based US dollar, triggered by a combination of factors, also played a major role in supporting the oil prices, as the price of oil is inversely related to the price of the greenback.

On the contrary, the concerns about the escalation of the COVID-19 pandemic and the uncertainty over the outcome of the US presidential election have become key factors that are keeping a lid on any runaway rally for the crude oil prices. In the same line, the increase in Libya’s oil production/exports could also be considered a major factor that has been capping further upside momentum for the crude oil prices. WTI Crude Oil is currently trading at 39.09, and consolidating in the range between 37.27 and 39.23.

As we have already mentioned, the crude oil stockpiles dropped more than expected last week, as per the latest government data. On the data front, WTI Crude Oil inventories shed 7.99 million barrels, against expectations for a build of 890,000 barrels, as per the Energy Information Administration report. It is also worth remembering that three of the previous five weeks have shown a draw-down in inventory.

Apart from this, the bullish sentiment surrounding the crude oil prices was further bolstered by the reports suggesting that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, which is led by Russia, continues to consider the idea of postponing its planned increases in production (originally planned for January 2021), which tends to ease oversupply concerns and underpin the crude oil prices.

Across the pond, the upbeat market tone is also supporting the crude oil prices. The risk sentiment is therefore favored by the reports suggesting that the chances of President Donald Trump’s victory have narrowed in the key battleground state of Michigan. Details suggests that the Democratic challenger Joe Biden now has 49.5% votes against Trump’s 48.8% of the 97% expected votes counted so far. Despite this, Donald Trump still maintains a lead of 700,000 in Pennsylvania, though there are still more than 1.4 million votes yet to be counted in the state. Thus, the increasing probability of Biden’s victory has boosted investor confidence, as the Biden administration is expected to pass big stimulus packages to boost the economy, which has been hard-hit by COVID-19. As a result, the US equity futures have been boosted, which tends to undermine the demand for traditional safe-haven assets, like the US dollar.

On the USD front, the broad-based US dollar failed to extend its gaining streak of the previous day, as it came under pressure on the day, after Reuters reported that the incumbent President Donald Trump’s lead has narrowed in the key battleground state of Michigan. Apart from this, the losses in the US dollar were further bolstered after the ADP report showed that private-sector employers added less jobs than expected, amounting to just 365K jobs in October, compared to the previous month’s upwardly revised reading of 753K. Meanwhile, the resurgence of the coronavirus keeps fueling fears that the economic recovery in the US could grind to a halt, which is also keeping the greenback under pressure. Thus, the losses in the greenback have become a key factor that is keeping oil prices higher, 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 dropped to 93.490.

On the contrary, the gains in the crude oil prices 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, which is constantly fueling worries over economic recovery, and has become a key factor that has kept a lid on any additional gains in the crude oil prices. In the meantime, increasing Libya’s oil production/exports could also be considered a major factor that has been capping further upside momentum for crude oil prices. As per the latest report, Libya’s oil production/exports keep rising, since the country has lifted the force majeure in many of its ports and oilfields.

Moving ahead, the market traders will keep their eyes on the US Unemployment Claims, USD price dynamics, and coronavirus headlines, which could give fresh direction for the crude oil prices. In the meantime, the continuous drama surrounding the US elections and updates about the US stimulus package will not lose any significance on the day. Good luck!