During Friday’s early Asian trading session, the WTI Crude Oil prices snapped their three-day bullish run-up. They came under some selling pressure around the 41.00 level, after the EIA’s downbeat inventory numbers, which showed a sharp build-up in US crude oil stocks. Apart from this, the new explosion of coronavirus cases in the United States keeps threatening the outlook for oil, which puts further pressure on the crude oil prices.

Across the pond, the reason for the heavy losses in the crude oil prices could also be attributed to the latest reports suggesting that OPEC’s oil output in October surged by 320,000 BPD, due to the increase in Libyan oil production. Besides this, the market risk-off mood, triggered by Fed Chair Powell’s latest warnings about the coronavirus vaccine, also played a major role in undermining the crude oil prices.

The equity market losses were further bolstered by the tension between the US and China, which is still not showing any signs of slowing down. Despite the risk-off market mood, the broad-based US dollar remains depressed, which has become one of the major factors that is helping to limit deeper losses in oil, as the oil price is negatively related to the price of the US dollar. Furthermore, the losses in crude were also capped by the optimism over the coronavirus vaccine, which has somewhat restored hopes for a steady rebound in the global energy demand. Currently, crude oil is trading at $ 40.84, and consolidating in the range between 40.81 and 40.94.

In addition to the US, Europe also imposed lockdowns again last week, which has threatened the outlook for oil and undermined the oil prices. It is worth recalling that Sweden declared a partial lockdown, shutting down bars and restaurants for the first time since the virus started spreading across Scandinavia. Thus, the back to back lockdown restrictions keep harming the crude oil demand.

Besides the virus woes, one reason for the bearish crude oil prices could also be associated with the long-lasting US-China tussle, which was fuelled further after the US warned China over the Hong Kong crackdown yesterday. Apart from this, the Trump administration indicated its willingness to limit investment by Chinese companies, which further aggravated the tussle, which is already intense. Furthermore, the resumption of Libyan oil production keeps fueling the oversupply concerns, which is also a leading factor that is weakening crude oil prices.

Apart from this, the declines in the crude oil prices were further bolstered after Fed Chair Jerome Powell raised doubts about the vaccine-led complacency, which put an additional burden on the market trading sentiment. Despite the risk-off market mood, the broad-based US dollar failed to stop its overnight losses, remaining depressed. This has turned out to be one of the major factors that is helping to limit deeper losses in the oil prices, as the price of oil is inversely related to the price of the US dollar.

On the USD front, the broad-based US dollar failed to gain any positive traction, edging lower on the day, as doubts persist over the global economic recovery from the COVID-19 pandemic. Meanwhile, at 92.957, the US Dollar Index, which tracks the greenback against a bucket of other currencies, is down. Good luck!