Crude Oil Soars for Seventh Consecutive Day – All Eyes on API Data!

During Tuesday’s Asian trading session, WTI Crude Oil rose for the seventh consecutive day, refreshing its 13-month high level, well above the mid-58.00 region, as supply cuts by major producers, and optimism over oil demand recovery keep supporting the energy markets. Meanwhile, the bullish bias surrounding the crude oil prices could also be attributed to the optimism over the progress in terms of global vaccinations and the pick-up in economic activities.

Furthermore, the improved expectations of US President Joe Biden’s $ 1.9 trillion COVID relief stimulus and the Tehran-Washington tussle over the 2015 nuclear accord also played a major role in supporting the crude prices. Besides this, the oil prices also got some instant additional support after the US dollar index (DXY) dropped from a 2-month high, as the price of oil is inversely related to the price of the US dollar.

On the other hand, the increasing numbers of COVID-19 cases and further restrictive measures throughout the world, such as lockdowns, turned out to be key factors that kept a lid on any additional gains in the crude oil prices. At the time of writing, WTI Crude Oil was trading at 58.44, and consolidating in the range between 57.98 and 58.51. Looking forward, the traders appear careful to place any strong positions ahead of the US crude oil supply data from the American Petroleum Institute, which is due later in the day.

The market trading sentiment maintained its positive performance the previous week, remaining positive on the day, as upbeat developments concerning the US COVID relief package and coronavirus vaccines keep favoring the risk sentiment. It should be noted that the Republican Leader of the US House, Mitch McConnel, slammed the Democratic Party’s push for going ahead independently, towards passing the $ 1.9 trillion COVID stimulus package. Meanwhile, earlier in the day, Japanese Finance Minister Taro Aso indicated his willingness to release 1.3 trillion yen in emergency COVID-19 stimulus for the Asian major.

Another reason behind the positive market performance could also be attributed to the developments between big nations to tackle trade tussles issues. As per the latest report, the Australian Ambassador earlier urged the US regarding a transatlantic trade deal. Meanwhile, the EU and the UK also showed willingness to ease trade tensions with the US over the Aircraft subsidies. This, in turn, was seen as one of the key factors that underpinned the higher-yielding crude oil prices.

The crude oil prices reached an additional lift across the ocean after the major crude oil producers, like Saudi Arabia, promised to cut crude output as per their commitments. It is worth recalling that Saudi Arabia has implemented further supply cuts for February and March, on top of those implemented by members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+). By reducing supplies, they are helping to balance the global markets. Moreover, the upticks in crude oil prices were further bolstered by the Tehran-Washington tussle over the 2015 nuclear accord.

On the USD front, the broad-based US dollar failed to extend its winning streak of the previous-day, turning sour as the demand for safe-haven assets was still low amid hopes of a faster US economic recovery from COVID-19 and progress toward agreeing on the next round of US fiscal stimulus. However, the losses in the US dollar helped crude oil to stay bid, as the oil price is inversely related to the price of the greenback. Meanwhile, by 8:32 PM ET (1:32 AM GMT), the US Dollar Index, which tracks the greenback against a bucket of other currencies, had dropped by 0.08%, to 90.868.

On the flipside, the increasing numbers of COVID-19 cases and further restrictive measures throughout the world could be considered a bearish factor that has kept a lid on any additional gains in the crude oil prices. Moving ahead, the market traders will keep their eyes on the US crude oil supply data from the American Petroleum Institute, which is due later in the day. In addition to this, the news relating to the US aid package, coronavirus (COVID-19) vaccines and the US-Iran tensions could provide fresh direction for the commodity. Good luck!