Today, in the Asian trading session, WTI Crude Oil failed to stop its early-day declining streak, and it remained depressed around the $ 52.00 level, as the ever-increasing numbers of COVID-19 cases globally keep increasing the fuel demand worries, which has contributed towards the losses in crude oil. Moreover, the bearish sentiment around the crude oil prices could also be attributed to the rumors that US President-elect Joe Biden is going to cancel Canada’s Keystone XL pipeline permit.

Meanwhile, the downbeat US data released on Friday has played a major role in undermining the crude oil prices. The losses in oil were further bolstered by the upticks in the US dollar, as the US dollar usually moves inversely to crude oil. In contrast to this, the upbeat GDP and Industrial Production data from the 2nd largest economy (China), keep challenging the bearish bias of oil. Simultaneously, the optimism linked to the rollout of COVID-19 vaccines in the UK has also helped to limit deeper losses in the crude oil prices. At the moment, crude oil is trading at $ 52.28 and consolidating in the range between 51.83 and 52.38.

On the Chinese data front, China’s 4th quarter (Q4) GDP increased from 6.1% to 6.5% YoY but eased on a QoQ basis, to 2.6%, against the 3.2% forecast and the previous 2.7%. Moreover, Industrial Production for December grew past the expected 6.9%, to 7.3% YoY, while Retail Sales fell below the previous readout of 5.0% and the 5.5% market consensus. Despite the Chinese economy playing a major role in the global economy, the upbeat Chinese data failed to support the forex market.

Despite this supporting data, the ever-increasing numbers of global COVID-19 cases has pushed more countries, such as the US and China, into deep lockdown measures, which keep intensifying fuel demand worries and contributing to the crude oil losses. As per the latest report, more than 28 million Chinese people are in lockdown as Beijing tries to avoid a resurgence of the coronavirus in the country where it was first discovered. Thus, the COVID woes are keeping the energy industry under pressure, which is putting a burden on the higher-yielding crude oil.

Elsewhere, the disappointing US Retail Sales and Jobless Claims data, which was released on Friday, has played a major role in undermining the crude oil prices. On the US data front, the core retail sales declined by 1.4% month-on-month in December, which was higher than the 0.1% contraction in the forecasts and the 1.3% contraction recorded in November. Meanwhile, the Producer Price Index (PPI) increased by 0.3% month on month in December, while retail sales declined by 0.7% in the same month.

Despite the downbeat US data, the broad-based US dollar managed to extend its early-day gaining streak, remaining bullish during the Asian session on the day, as investors still prefer to invest in the safe-haven assets, in the wake of a risk-off market sentiment. It is worth recalling that the US dollar was supported by the Democrat victories in the runoff Senate elections in the state of Georgia earlier in the month. This resulted in a surge in US yields, as he Democrats got control of the Congress. The US dollar gains were seen as one of the key factors that kept the oil prices under pressure, as the weaker USD tends to make it cheaper for holders of other currencies to purchase crude oil. By 10:46 AM ET, the US Dollar Index, which tracks the greenback against a bucket of other currencies, had risen by 0.05%, to 90.800.

On the positive side, the decreasing numbers of COVID-19 infections in the UK is helping to limit deeper losses in the market trading sentiment. As per the latest figures, the UK reported 38,598 new coronavirus cases on Sunday, which is the lowest number since December 27. The United Kingdom will start providing doses of vaccine to people aged 70 and above and to those who are considered extremely vulnerable to the coronavirus, from a clinical point of view. Thus, the rolling out of the vaccines will ease some of the economically damaging lockdown restrictions in March.

In the absence of any major data/events on the day, the market traders will keep their eyes on BOE Gov Bailey’s speech, along with the Candian Housing Starts. In the meantime, the risk catalysts, like geopolitics and the virus woes, will also be key to watch. Good luck!