Bullish Streak Continues for WTI Crude Oil – A Combination of Factors!
Arslan Butt • 3 min read
During Monday’s Asian trading hours, the WTI Crude Oil prices managed to extend their early-day bullish streak. They hit the intra-day high close to the $ 47.00 mark, mainly due to the prevalent optimism over a potential vaccine for the highly infectious coronavirus disease, which ultimately fueled hopes of a recovery in the fuel demand and contributed to the gains in the crude oil prices. Apart from this, the reason for the gains in crude oil could also be associated with fresh, positive reports suggesting an extension of the Brexit talks between the UK and the European Union (EU), which eased global fuel demand worries and contributed to the increases in crude oil prices.
Moreover, the crude oil sentiment was further improved by the renewed hopes over the much-awaited stimulus package in the US. The upbeat market sentiment also played a major role in underpinning the higher-yielding crude oil prices across the pond. As a result, the upbeat market mood is receiving support, due to the hopes associated with the coronavirus vaccine and the Brexit talks. As a result, the broad-based US dollar failed to gain any safe-haven bids and edged lower on the day, which also played a key role in weakening the crude oil prices, as the oil price is inversely related to the price of the US dollar. Conversely, the gains in crude oil prices could be capped by the intensifying concerns about the escalation of the COVID-19 pandemic, which keep fueling fears of renewed lockdowns in several countries. WTI Crude Oil is currently trading at 46.88, and consolidating in the range between 46.50 and 46.93.
The market trading sentiment represents positive performance on the day, as the bullish appearance of Asia-Pacific stocks and gains in the US stocks futures tend to highlight the risk-on mood. However, the reason behind the risk-on market sentiment could be attributed to the renewed optimism over a possible vaccine for the highly infectious coronavirus. As per the latest report, on Dec. 11, the US Food and Drug Administration (FDA) gave emergency permission for the use of BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy). The approval will see the first US deliveries of BNT162b2 later in the day, which has lifted hopes that the world’s largest oil consumer nation will see a reduction in COVID-19 cases.
Apart from this, the global equity market was further supported by the renewed hopes of a stimulus package. As per the latest report, the US Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $ 900 billion in aid, with figures of $ 748 billion and $ 160 billion likely for each bill. Hence, the upbeat market sentiment played a major role in underpinning the higher-yielding crude oil prices.