During Friday’s Asian trading hours, the WTI Crude Oil prices succeeded in extending their bullish streak of the previous day, achieving the highest levels since March 04, 2020, close to the $ 47.00 mark, mainly due to the growing optimism over the COVID-19 vaccine rollout in the UK and the expected approval of a vaccine in the United States, , which eventually fueled hopes that the demand for crude would build up next year.
Across the pond, the broad-based US dollar failed to gain any positive traction, remaining supportive of the crude oil prices, as the price of oil is inversely related to the price of the US dollar. Apart from this, the reason for the gains in crude oil could also be attributed to the upbeat concerns that US Congress members will soon provide the much-awaited COVID-19 stimulus package.
On the contrary, the downbeat market sentiment, triggered by the uncertainty over the US stimulus measures and Brexit, is playing a major role in capping the gains in higher-yielding crude oil prices. Currently, WTI Crude Oil is trading at 46.87, and consolidating in the range between 46.66 and 47.30.
Despite the optimism over the potential vaccine for the highly infectious coronavirus, the market trading sentiment failed to stop its negative overnight performance, remaining on the downside during the Asian session, amid a combination of factors. Several matters, including the worrying headlines concerning Brexit and the tensions between the US and China, not to forget the coronavirus issues in the US and Europe, have been weighing on the market trading sentiment. The resurgence of the coronavirus (COVID-19) in Europe and the US continues to pick up further pace, which keeps fueling doubts over economic recovery, as policy-makers in the US and Europe keep announcing back to back restrictions on activities.
The uncertainty over the Brexit talks and intensifying coronavirus cases all over the globe are further burdening the equity market. However, these negative headlines were seen as one of the key factors that has kept a lid on any additional losses in crude oil prices.
Despite the risk-off mood, the broad-based US dollar failed to stop its losing streak of the previous day, remaining bearish on the day, as doubts persist over global economic recovery from the COVID-19 pandemic, as witnessed after the record death toll in the US as a result of the disease, coupled with a jump in US Jobless Claims. However, the declines in the US dollar have become the key factor that is helping the crude oil prices to stay bid, as the price of oil is inversely related to the price of the greenback. Meanwhile, the US Dollar Index, which tracks the greenback against a bucket of other currencies, has dropped by 0.18%, to 90.653.
On the bullish side, the US Food and Drug Administration’s (FDA) experts said that the Pfizer-BioNTech vaccine would be implemented to stop the pandemic soon. Moreover, the UK, Bahrain and Canada have already approved the vaccine for emergency usage, which keeps challenging the risk-off mood in the market, thereby contributing to the gains in crude oil. The gains in the crude oil prices were further bolstered after Ottawa started stocking vaccines, while the US is set to be the next country to approve the BNT162b2 vaccine. However, the recovery from the pandemic will only speed up once a vaccine is widely available.
Moving ahead, the market traders will keep their eyes on the US stimulus headlines and vaccine news. In the meantime, the updates surrounding the Brexit trade talks and the Sino-US tussle did not lose any significance on the day. Good luck!