During Wednesday’s Asian trading hours, WTI Crude Oil succeeded in extending its overnight winning streak, hitting the highest level in nearly ten months, well above the $ 50.00 level, mainly after the unexpected commitment by Saudi Arabia to cut crude production further, by one million barrels a day in February. This instantly underpinned the crude oil prices. Apart from this, another reason for the gains in crude oil could be attributed to the upbeat US crude oil supply data from the American Petroleum Institute, which showed a draw of 1.663 million barrels.

Furthermore, the optimism over a possible coronavirus vaccine and the probability of an additional US financial aid package also played a major role in underpinning the crude oil prices. On the bearish side, the ever-increasing numbers of COVID-19 cases globally forced countries to impose tighter restrictive measures, which raised concerns over the fuel demand and became a key factor that has kept a lid on any additional gains in the crude oil prices. Apart from this, the fresh broad-based bullish bias of the US dollar, backed by multiple factors, has turned out to be one of the key factors that could cap the upside momentum in crude oil prices, as the price of oil is inversely related to the price of the US dollar.

On the other hand, the gains in crude oil prices were also capped by the long-lasting Sino-US tussle. WTI Crude Oil is currently trading at 50.05, and consolidating in the range between 49.72 and 50.25. Moving on, the market traders seem cautious about placing any strong positions ahead of the release of the crude oil supply data from the US Energy Information Administration, which is due later in the day.

On the data front, the US crude oil supply data from the American Petroleum Institute showed a draw of 1.663 million barrels. This draw was bigger than the draw of 1.5 million barrels in the forecast, but smaller than the 4.785-million-barrel draw of the previous week.

Furthermore, the crude oil prices got an additional lift after the surprising commitment by Saudi Arabia to cut crude output further in February, by one million barrels a day. As per the latest report, the Saudi announcement came as the Organization of the Petroleum Exporting Countries and allies, or OPEC+, closed the second day of its Joint Ministerial Monitoring Committee and the 13th OPEC and non-OPEC Ministerial Meeting. It is worth recalling that the meetings were extended by one day after the members failed to reach an agreement on the February output on Monday.

Meanwhile, Alexander Novak (Russian Deputy Prime Minister) described the Saudi commitment as “a great New Year’s present for the whole oil industry”, which gave traders more confidence.

Across the ocean, the upticks in the crude oil prices could also be associated with the renewed optimism over potential vaccines for the highly infectious coronavirus. As per the latest report, the US Food and Drug Administration (FDA) said that millions of medicines are on the way to the UK. This came after the US Food and Drug Administration (FDA) showed an almost 95% success ratio for the leading coronavirus vaccines, after two doses.

Alternatively, the market trading sentiment represents a negative performance on the day, as the bearish appearance of the US Stocks Futures tends to highlight the risk-off mood. However, the reason behind the risk-off market sentiment could also be attributed to the news that US President Donald Trump recently signed an executive order to stop business with about 8 Chinese applications. Meanwhile, the New York Stock Exchange is reviewing its decision to stop 3 major Chinese telecommunications companies’ from delisting. Meanwhile, the fears of intensifying numbers of coronavirus cases globally put further pressure on the equity market. However, these negative headlines were seen as one of the key factors that kept a lid on any additional rise in the crude oil prices.

On the USD front, the broad-based US dollar managed to stop its losing streak of the previous day, drawing some fresh bids on the day, as the hopes of larger government borrowing pushed the benchmark 10-year US Treasury Yields to the highest level since March, which eased the bearish pressure surrounding the US dollar. Apart from this, the cautious sentiment ahead of Georgia’s election results, coupled with the Sino-American tensions, is also supporting the safe-haven US dollar. However, the gains in the greenback have become a key factor that could cap further upside momentum for crude oil, as the weaker USD tends to make it cheaper for holders of other currencies to purchase crude. By 11:16 PM ET (4:16 AM GMT), the US Dollar Index, which tracks the greenback against a bucket of other currencies, had risen by 0.15%, to 89.547.

Moving ahead, the market traders will keep their eyes on the release of crude oil supply data from the US Energy Information Administration, which is due later in the day. Apart from this, the release of the latest FOMC monetary policy meeting minutes will be key to watch, as the FED’s policy outlook will play a key role in influencing the near-term USD price dynamics. Meanwhile, the updates surrounding the Sino-US tussle and the virus woes have not lost their importance on the day. Good luck!