WTI Crude Oil Slips Below $52 – Intensifying Coronavirus Weights - Forex News by FX Leaders

WTI Crude Oil Slips Below $52 – Intensifying Coronavirus Weights

Posted Monday, January 11, 2021 by
Arslan Butt • 2 min read

Today, the Asian trading session, WTI Crude Oil failed to maintain its bullish trend of the previous week, edging lower, near the $52.00 level, as ever-increasing numbers of COVID-19 cases globally, are resulting in strict lockdown measures in many countries, most recently in Europe and China, which instantly triggered fuel demand worries and contributed to the losses in crude oil. Furthermore, the bearish sentiment surrounding the crude oil prices got an additional lift after the US showed readiness to impose further sanctions on China. In addition to this, the losses in the crude oil prices were further bolstered by the upticks in the US dollar, as the oil price is inversely related to the price of the greenback.

In contrast to this, US President-elect Joe Biden’s commitment to announcing trillions of dollars in new COVID-19 relief measures has helped to limit deeper losses in the the oil prices. Saudi Arabia’s promise to voluntarily cut its oil output by 1 million barrels per day (BPD) in February and March could also be capping the losses. Besides this, the optimism linked to the rollout of COVID-19 vaccines is also playing a major role in supporting the crude oil prices. At the moment, crude oil is trading at $ 51.95 and consolidating in the range between 51.55 and 52.70.

As already mentioned, the ever-increasing number of COVID-19 cases globally is causing more countries, most recently in Europe and China, to impose strict lockdown measures, which has instantly triggered concerns over the fuel demand, and contributed to the losses in crude. As per the latest report, China, the 2nd-biggest crude oil consumer worldwide, marked its biggest daily rise in COVID-19 cases in more than 5 months. Moreover, the growing number of new infections in Hebei province surrounding Beijing continued to rise. Hebei’s capital, Shijiazhuang, was seen as the epicenter of a new virus outbreak in the province, which in turn resulted in lockdown measures that prevent people and vehicles from leaving the city. Across the pond, the European region also remains under strict lockdown, while the number of global COVID-19 cases exceeds 90.2 million as of Jan 11.

The reason for the bearish crude oil prices could also be associated with the fresh reports suggesting that the US is thinking about imposing more punitive measures on the Dragon Nation, as a part of its crackdown on issues relating to Hong Kong and the Uyghur Muslims. The US-China tussle is not showing any signs of slowing down. This could be tied to the latest push by the US to connect with Taiwan, while also favoring Hong Kong. Thus, the fears of a full-fledged trade/political war between the US and China keep undermining the crude oil prices.

In contrast to this, US President-elect Joe Biden’s promise to provide trillions of dollars in new COVID-19 relief measures has helped to limit deeper losses in oil. Besides this, Saudi Arabia’s commitment to voluntarily cut its oil output by 1 million barrels per day (BPD) in February and March, is also helping the crude oil prices. It is worth mentioning that the cut is part of a deal that will ensure that most Organization of the Petroleum Exporting Countries and allies, or OPEC+, will hold production levels steady.

Traders will keep their eyes on the BOC Business Outlook Survey and the speech by FOMC Member Bostic. In the meantime, the risk catalysts, like geopolitics and the virus woes, will also be key to watch. Good luck!

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