WTI Crude Oil Stops its Losing Streak – A Quick Fundamental Outlook!
Arslan Butt • 3 min read
During Monday’s early Asian trading session, the WTI Crude Oil prices succeeded in halting last week’s bearish streak, drawing some modest bids around the mid-$ 40.00 level, as traders are still cheering the hopes that OPEC+ will extend its current supply restrictions, in an effort to overshadow worries over the weaker oil demand, amid rising numbers of COVID-19 cases and higher oil production from Libya. Furthermore, the bullish bias surrounding the crude oil prices was further bolstered by the latest report suggesting that the Indian oil demand has risen for the first time since February. Across the ocean, the reason for the bullish bias in the crude oil prices could also be associated with the release of China factory data, which exceeded the forecasts, raising hopes of economic growth in China, and contributing to the gains in crude. Apart from this, the developments on the COVID-19 vaccine front are also paying a major part in underpinning the crude oil prices, as many major vaccine producers are expected to deliver data on their vaccine candidates shortly.
In the meantime, the bearish bias of the broad-based US dollar, triggered by the market risk-on mood, was also seen as one of the key factors that kept the crude oil prices higher, as the price of oil is inversely related to the price of the US dollar. On the contrary, the rising concerns over the escalation of the COVID-19 pandemic in the US and Europe, coupled with the rising oil production from Libya, has become the key factor that has kept a lid on any additional gains in the crude oil prices. WTI Crude Oil is currently trading at 40.70, and consolidating in the range between 40.16 and 40.78.
The crude oil prices started the week on a bullish note. However, the major support has been coming from the hopes that OPEC+ will extend its current supply restrictions, in an attempt to overshadow worries over the weaker oil demand. As per the latest report, the Organization of Petroleum Exporting Countries and their allies (OPEC+) are scheduled to meet from Nov. 30 to Dec. 1, to decide their future policies. OPEC+ is widely expected to maintain the current 7.7 million barrels per day (BPD) supply restrictions that have been in place since August. Besides this, the body’s Joint Technical Committee meeting is due later in the day, while the Joint Ministerial Monitoring Committee is due to meet on Tuesday; both are expected to clarify the group’s intentions.
However, the market trading sentiment managed to extend its overnight upbeat performance and continued to flash green during the early Asian session today. As a result, the market sentiment has received support from the widespread optimism over a vaccine for the highly contagious coronavirus, which ultimately boosted the demand sentiment surrounding crude. It is worth recalling that many major vaccine producers are expected to release data on their vaccine candidates shortly.