During Tuesday’s Asian trading session, the WTI Crude Oil prices failed to stop their early-day bearish bias, remaining depressed around the $ 52.50 level, as the COVID-19-induced lockdowns continue globally, which is increasing fears regarding the fuel demand and contributing to the modest losses in crude. Apart from this, the losses in oil could also be attributed to the renewed concerns about fuel sales in India, which was the 3rd-largest crude oil importer globally in 2020. But in January, imports have fallen, compared to December. Meanwhile, the sluggish rollout of vaccines is also raising concerns that a recovery in the fuel demand will remain difficult. This was seen as another factor that kept the crude oil prices under pressure.

On the positive side, the broad-based on-going weakness of the US dollar is helping to limit deeper losses in the higher-yielding crude oil prices, as the price of oil is inversely related to the price of the greenback. However, the losses in the US dollar were mainly sponsered by the cautious sentiment ahead of the inauguration of Joe Biden’s government and the coronavirus (COVID-19) concerns. Meanwhile, the expectations for record low interest rates are also keeping the US dollar under pressure. Across the Atlantic, China’s positive economic data has lent some additional support to the crude oil prices, limiting its bearish rally. At the moment, crude oil is trading at $ 52.28, and consolidating in the range between 52.17 and 52.49.

The investors are still concerned about the impact of the new strain of COVID-19 on global economic recovery. As per the latest report, China marked an increase of 9 new covid cases while the number of people hospitalized for COVID-19 was higher for the second day, at 25,584, which is the highest rate in one month. In addition to this, the virus-led restrictions in the UK, Japan and the US are weighing on the economies and intensifying fears about the fuel demand.

Apart from this, the bearish crude oil prices could also be associated with the concerns about falling fuel sales in India. It is worth mentioning that this country was the 3rd-largest crude oil importer globally in 2020, but the figures have dropped in January, compared to December. Meanwhile, the sluggish rollout of vaccines is also raising concerns that a recovery in demand will remain difficult.

Despite these negative concerns, the market trading sentiment succeeded in stopping its negative performance of the previous-day, flashing green on the day, as the markets prepare for a warm welcoming party for US President-elect Joe Biden and company, probably due to his fiscal relief goals. Joe Biden and his officials are expected to inject the promised $ 1.9 trillion covid aid package into the economy. The investors will keep their eyes on Secretary of the Treasury nominee Janet Yellen’s comments on the US stimulus measures. Biden’s optimistic plan needs Senate’s approval, and that’s where his team member, Janet Yellen, will play a big role; her most recent notes, prepared for today’s Senate speech, suggest that she is in favor of the huge relief package, considering the record low interest rates.

The latest upbeat Chinese data from across the ocean also played a major role in underpinning the market trading sentiment. The positive tone surrounding the market sentiment favors crude oil, due to the weakness of the USD. Data shows that refinery output increased by 3%, to a new record in 2020. The data, which was released by the National Bureau of Statistics on Monday, also showed that industrial production rose by 7.3% year-on-year in December. In the 4th quarter, the GDP climbed 6.5% year-on-year, and 2.6% quarter-on-quarter. This upbeat data indicates that China was also the only main economy to avoid a recession in 2020, while many countries are still fighting to control the spread of COVID-19.

As a result of the risk-on mood, the broad-based US dollar failed to gain any positive traction, remaining bearish on the day. Meanwhile, the losses in the greenback were further bolstered by the cautious sentiment ahead of the inauguraration of Joe Biden’s government and the coronavirus (COVID-19) issues. The losses in the US dollar are as a key factor that has helped to limit any further losses in the oil prices, due to the inverse relationship between the oil prices and the price of the US dollar. By 11:03 PM ET (4:03 AM GMT), the US Dollar Index, which tracks the greenback against a bucket of other currencies, had dropped by 0.11%, to 90.653.

Looking forward, market traders will keep their eyes on key speeches by Yellen, Biden and the ECB. Meanwhile, any further hints about the stimulus package, and of course the coronavirus updates, that are going to decorate the calendar over the next days, could add to the upside momentum of the commodity. Of course, the usual risk catalysts, like geopolitics and the COVID-19 woes, will continue to affect the market. Good luck!