WTI Succeeded to Extend Overnight Bullish Rally – Fundamental Outlook
Arslan Butt • 2 min read
Meanwhile, upbeat Chinese trade figures also played a major role in supporting oil prices. Moreover, the upticks were further bolstered by the ongoing optimism over the potential vaccine/treatment for the highly infectious coronavirus. Besides, oil prices got some additional support from the weaker U.S. dollar as oil is inversely related to the U.S. dollar. Alternatively, the absence of major data/events and the Sino-US tussle may limit the upside momentum of the commodity. WTI crude oil is currently trading at 67.94 and consolidating in the range between 66.69 – 67.98.
Apart from this, the upbeat market sentiment could also be attributed to upbeat trade figures from China, which boosted the hopes for economic recovery. China’s 60% spike in Trade Balance (USD terms) during January and February, to $103.25B, provided additional support to crude oil prices.
Furthermore, the energy benchmark got an additional lift after the reported attack on Saudi Arabia’s oil facilities, which gave the black liquid a boost. As per the latest report, Iran-backed Houthi forces fired drones and missiles to target the Saudi Arabian oil industry this weekend, including Saudi Aramco’s facility at Ras Tanura. However, Riyadh labeled the attack as a failed assault on global energy security after the drones and missiles were stopped. Apart from this, the reason for the bullish oil prices could also be tied to the news suggesting that Saudi Arabia’s hike in the official selling price (OSP) for its Arab Light crude to Asia by $1.40 per barrel.
Conversely, the absence of major data/events and the Sino-US tussle keep challenging the market risk-on mood, which could trim gains in the crude oil prices. At the US-China front, China’s Foreign Minister Wang Yi urged America to “stop crossing lines and playing with fire” on Taiwan. In the absence of the major data/events on the day, the markets will keep their eyes on the U.S. traders’ reaction to the market-positive news, especially after Friday’s upbeat NFP. Meanwhile, the risk catalyst and the U.S. dollar moves will also be key to watch. Good luck!
About the author
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.