Crude Oil Regains Positive Traction, Hitting Intraday High – All Eyes On OPEC Meeting!

During Monday’s Asian trading hours, the WTI Crude Oil price managed to recover its early-day gaining streak, hitting the intra-day high around the $ 49.00 mark, as the optimism surrounding the coronavirus (COVID-19) vaccine, Brexit headlines and the US COVID aid package have been favoring the market trading mood, as all of this has become a key factor that is underpinning the higher-yielding crude oil prices. Meanwhile, the weakness of the broad-based US dollar, triggered by the upbeat market mood, has also played a vital role in underpinning the crude oil prices, as the price of oil is inversely related to the price of the US dollar.

Apart from this, another reason for the gains in crude oil could also be associated with the cautiously positive comments by the  Secretary of the Organization of the Petroleum Exporting Countries (OPEC), Barkindo. On the bearish side, the concerns over the fuel demand from 2020 remain on the cards, as the number of COVID-19 cases continues to rise. This has led Japan to consider declaring a new state of emergency, after seeing record numbers of COVID-19 cases. These types of concerns could cap the upside momentum of the crude oil prices. WTI Crude Oil is currently trading at 49.01, and consolidating in the range between 48.14 and 49.30.

Despite the worsening virus conditions and US COVID aid package hurdles, not to forget the tussle between the US and China, the market trading sentiment has been flashing green 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 optimism surrounding the coronavirus (COVID-19) vaccine, Brexit headlines, and the US COVID aid package. Apart from this, the latest upbeat printouts of Asian activity from Japan, South Korea, Indonesia and Taiwan for December also played a major role in underpinning the market trading sentiment.

Furthermore, the gains in the equity market got an additional lift after the US policymakers pushed for $ 2,000 COVID aid paychecks, as Nancy Pelosi remains as US House Speaker. However, the positive tone surrounding the market trading sentiment is helping the higher-yielding crude oil prices to stay bid, thanks to the weakness of the greenback.

On the USD front, the broad-based US dollar failed to gain any positive traction, remaining bearish on the day, amid a risk-on market sentiment, backed by the optimism over the potential vaccines for the highly contagious coronavirus. On the other hand, the losses in the US dollar were further bolstered by the easy money policy of the US Federal Reserve and central bankers elsewhere. Therefore, the losses in the US dollar have become a key factor that has kept a lid on any additional losses in the crude oil prices, as the price of oil is inversely related to the price of the US dollar.

On the bearish side, the on-going chatter concerning the coronavirus (COVID-19), coupled with constant tussles between the US and China, keep challenging the risk-on mood in the market, which could cap further gains in the crude oil prices. As per the latest report, the numbers of COVID-19 virus cases are picking up pace continuously across the globe, which has raised fears of another round of lockdowns. It is worth mentioning that Japan is seeking expert advice on whether to declare a state of emergency in Tokyo and neighboring prefectures. In addition to Japan, the virus woes are also picking pace in the UK, where the National Health Services (NHS) have stepped back from their commitment to deliver two million COVID-19 jabs a week.

Across the pond, the Organization of the Petroleum Exporting Countries and allies, or OPEC+, are ready to attend a series of meetings to discuss easing current production cuts. The Joint Technical Committee of the cartel met on Jan. 3, and its Joint Ministerial Monitoring Committee Meeting and the 13th OPEC and non-OPEC Ministerial Meeting are set to take place later in the day.

Looking forward, the market traders will keep their eyes on the Caixin Manufacturing PMI for December, which is expected to come in at 54.9. Meanwhile, the second readings of monthly PMIs from Europe, the UK and the US could decorate the calendar ahead. In addition to this, the updates on the US stimulus package will be key to watch. In the meantime, the risk catalysts, like geopolitics and the virus woes, not to forget Brexit, will not lose ay significance. Good luck!