WTI Crude Oil Soars Near $ 60 Amid US Stimulus Hopes! - Forex News by FX Leaders

WTI Crude Oil Soars Near $ 60 Amid US Stimulus Hopes!

Posted Wednesday, March 3, 2021 by
Arslan Butt • 3 min read

Today, during the Asian trading session, WTI Crude Oil managed to stop its declining streak of the previous session, regaining some positive traction well above the $ 60.00 level, mainly due to the risk-on market sentiment, triggered by the hopes of US President Joe Biden’s $ 1.9 trillion COVID-19 relief package, which instantly bolstered hopes of a recovery in the fuel demand and contributed to the gains in crude oil. Apart from this, the bullish bias surrounding the crude oil prices could also be attributed to US President Biden’s optimism regarding coronavirus vaccines, which offered an additional positive boost to the market and helped crude oil prices stay bid.

Elsewhere, the positive comments by Aussie Treasurer Josh Frydenberg and Australia’s better-than-expected Q4 GDP eased doubts about economic recovery, which is also seen as the key factor that is lending some support to the crude oil prices. On a bearish note, the re-emergence of new COVID-19 cases in New Zealand has urged the authorities to impose further restrictive measures, such as lockdowns, and this has become a key factor that is keeping up the pressure on any additional gains in the crude oil prices. Furthermore, the fresh strength of the broad-based US dollar is also capping the upside momentum in crude oil, as the price of oil is inversely related to the price of the US dollar.

Meanwhile, the upticks in the crude oil prices were also capped by the downbeat American Petroleum Institute (API) data, which showed that the weekly inventories of oil had increased by 7.356 million barrels, against the previous addition of 1.026 million barrels. Crude oil is trading at 59.91, and consolidating in a range between 59.25 and 60.03. The traders seem cautious to place any strong positions ahead of this week’s meeting of the Organization of the Petroleum Exporting Countries and its allies – a group is known as OPEC+.

The market trading sentiment maintained its positive performance of the previous day. It remained supportive on the day, amid continued progress on the $ 1.9 trillion stimulus package proposed by US President Joe Biden, which raised hopes for a quick economic recovery from the COVID-19 pandemic and helped the market trading sentiment to stay bid. Meanwhile, US President Biden spoke about a coronavirus (COVID-19) vaccine partnership between Johnson & Johnson and Merck. Across the ocean, the Financial Times (FT) raised hopes concerning the extension of the furlough scheme in the UK, coupled with benefits worth 20 billion pounds, which also favored the risk sentiment. Elsewhere, the positive comments by Aussie Treasurer Josh Frydenberg, and Australia’s better-than-expected Q4 GDP, also played a major role in underpinning the market mood.

Furthermore, China has suggested that the People’s Bank of China’s (PBOC) reserve requirement ratio (RRR) cuts offered extra positive impulses to the market. Meanwhile, the optimism over the rollout of vaccines for the highly contagious coronavirus are also playing a significant role in supporting the market trading sentiment. The upbeat market mood was thus seen as one of the key factors underpinning the higher-yielding crude oil prices.

Across the pond, the Organization of the Petroleum Exporting Countries and allies, or OPEC+, are willing to meet on Thursday. They are generally positive regarding the outlook on the oil market, compared to last year, when they cut the supply to boost prices. Last week, OPEC+ sources said a production increase of 500,000 barrels per day (BPD) seemed possible, without inventories building up. Saudi Arabia’s voluntary cut of 1 million BPD is set to end in April, but it is unsure whether the country will restore all of that supply right away.

Moving ahead, market traders will keep their eyes on the supply data from the US Energy Information Administration, which is due later in the day. Meanwhile, the OPEC+ meeting will also be closely observed. Besides this, the chatter surrounding the stimulus packages in the US and the UK will not lose any importance. Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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