During Wednesday’s Asian trading session, WTI Crude Oil rose once again, extending its rally of more than one week, after the bullish weekly API private inventory report, which showed a draw of 3.5 million barrels. Meanwhile, the risk-on market conditions and hopes of global economic recovery from COVID-19 also played a major role in underpinning the crude oil prices. The bullish bias surrounding the crude oil prices could also be attributed to the hopes of the much-awaited US COVID relief stimulus package and optimism concerning the coronavirus (COVID-19) vaccines, which also exerted an additional positive impact on the crude oil prices. Something else that could also be supporting the oil sentiment are the latest reports suggesting that the world’s biggest exporter, Saudi Arabia, is reducing the oil supply in February and March.

Meanwhile, the recently agreed production cuts by other members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies are also supporting the crude oil prices. Across the ocean, the weakness of the broad-based US dollar, triggered by the low safe-haven demand, also exerted a positive impact on the crude oil prices, as the price of oil is inversely related to the price of the greenback. In contrast to this, the growing numbers of COVID-19 cases globally keeps pushing more countries into deeper lockdown measures, which could cap any further upside momentum for the crude oil prices.

WTI Crude Oil is currently trading at 58.20 and consolidating in the range between 58.11 and 58.45. Moving forward, traders appear careful to place any strong positions, ahead of data from the US Energy Information Administration, which is due later in the day. The bullish bias surrounding the crude oil prices could be attributed to the latest upbeat API data, which showed a surprise draw in US crude oil supplies. On the data front, the US supply data from the American Petroleum Institute reported a draw of 3.5 million barrels against a forecast of a 1.340-million-barrel build and a 4.261-million-barrel draw, which was recorded last week.

The market trading sentiment extended its positive performance of the past weeks, still flashing green on the day, possibly due to the progress towards passing US President Joe Biden’s $ 1.9 trillion stimulus package. Meanwhile, the upticks were further bolstered by the optimism concerning the coronavirus (COVID-19) vaccines. As per the latest report, the American Congress is discussing the much-awaited stimulus, to the tune of $ 1.9 trillion, and a rollout is expected very soon. Simultaneously, the makers of the coronavirus (COVID-19) vaccines have started directing research towards tackling the variants.

Another factor that could also be supporting the market sentiment is China’s downbeat Consumer Price Index (CPI) and Producer Price Index (PPI) for January, which suggest recent weakness of the global commodity leader and the need for more fiscal-monetary aid. Thus, the upbeat market trading sentiment was seen as one of the critical factors underpinning crude oil prices.

Across the pond, the world’s biggest oil exporter, Saudi Arabia, is reducing the supply during February and March. This is seen as one of the key factors that is helping the crude oil prices to stay bid. Meanwhile, the recently agreed production cuts by other members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies are also supporting the crude oil prices.

On the USD front, the broad-based US dollar failed to stop its losing streak of the previous day, remaining depressed, as the demand for safe-haven assets is low, amid hopes of the much-awaited US COVID relief stimulus package and optimism concerning the coronavirus (COVID-19) vaccines. However, the losses in the US dollar helped crude oil to stay bid, as the price of oil is inversely related to the price of the US dollar. Meanwhile, by 10:54 PM ET (3:54 AM GMT), the US Dollar Index, which tracks the greenback against a bucket of other currencies, had dropped by 0.05%, to 90.370.

On the bearish side, a World Health Organization (WHO) team is examining the possible origins of  COVID-19 in China. Due to the dragon nation’s bitter relations with the west, and some other Asian countries, the global policymakers are keenly awaiting clues that will enable them to hold China responsible for the global chaos caused by the virus. However, negative results could put the brakes on the upbeat mood in the market. Another factor that could also be questioning the upbeat market sentiment is the re-emergence of COVID-19 cases in many countries, which has urged authorities to impose further restrictive measures, such as lockdowns, which is raising doubts regarding the hopes of a recovery in the fuel demand. This is seen as a key 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 supply data from the US Energy Information Administration, which is due later today. Meanwhile, traders will also watch the US CPI data, to confirm the reflation chatter. Federal Reserve Chairman Jerome Powell’s speech, which is due at 19:00 GMT, will also be closely observed. In addition to this, the updates surrounding the coronavirus vaccines and the US financial aid package could provide fresh direction for the commodity. Good luck!