WTI Crude Oil failed to put a stop its early-day losing streak, remaining depressed around the $ 47.50 level, as the rising numbers of new coronavirus cases in the UK has fueled concerns that tighter lockdown restrictions, both in the UK and in other European countries, will put the brakes on the recovery of the global economy. It is worth mentioning that the latest declines came after the crude oil prices registered seven consecutive weeks of gains last week, as investors cheered the rollout of COVID-19 vaccines. Apart from this, the heavy losses in the crude oil prices could also be attributed to the downbeat market mood, which tends to undermine the higher-yielding crude oil prices. However, the market trading sentiment was under pressure, due to the Brexit woes and the fears of a new mutation of the coronavirus (COVID-19).
As a result, the broad-based US dollar succeeded in gaining some safe-haven traction, edging higher on the day. This could also be considered as one of the key factors that has kept the crude oil prices under pressure, as the price of oil is inversely related to the price of the US dollar. Across the pond, the trump administration is set to impose new sanctions on Chinese companies, including the country’s top chipmaker SMIC. This move could hurt the trade deal between the two nations.
The new mutation of the coronavirus in the UK, which has resulted in tighter travel restrictions in Europe, keeps fueling fears of a slower economic recovery and fuel demand, and this has become a key factor that is keeping the crude oil prices under pressure. Southeast England is under the Tier-4 lockdown, and there has also been one case each in the Netherlands and Australia. On the European mainland, Italy and France have joined Turkey in suspending travel to and from the UK, in an effort to contain the spread of the pandemic.
In addition to this, another reason for the bearish crude oil prices could also be associated with the long-lasting Sino-US tussle, which is continuously picking up pace following US President Donald Trump’s decision to add dozens of Chinese companies, including the country’s top chipmaker SMIC, to the commerce department’s black list.
The Brexit issue remains on the cards, amid a fresh breakdown in talks between the UK and the Eurozone, relating to Brexit, and this is keeping market players on edge. As per the latest report, the EU Chairman of the Foreign Affairs Committee, David Callister, declared that the European Parliament will not be in a position to give any approval to an agreement this year, as the European Union (EU) and the UK are still at loggerheads over fisheries and a level playing field.
The market trading sentiment has been flashing red signals since the day started. The mixed trading could be attributed to the coronavirus (COVID-19) and the woes surrounding the US-China tussle. As a result, the broad-based US dollar managed to gain some positive traction, edging higher on the day. However, the bullish bias of the greenback was rather unaffected by the worsening coronavirus (COVID-19) conditions in the US, and furthermore, the progress with regard to the US stimulus talks tends to undermine the US currency. However, the gains in the US dollar have become the key factor that is keeping the crude oil prices under pressure, as the price of oil is inversely related to the price of the US dollar. Good luck!