⚡Crypto Alert : Altcoins are up 28% in just last month! Unlock gains and start trading now - Click Here

WTI Crude Oil Stays Below $60 – COVID-19 Lockdowns Pressure Demand!

Posted Thursday, March 25, 2021 by
Arslan Butt • 3 min read

During Thursday’s Asian trading session, WTI crude oil failed to stop its previous four-day losing streak and remains depressed around below the $60.00 level amid concerns over the fresh COVID-19-induced lockdowns in Europe, which in turn, re-triggered fuel demand worries and contributed to the crude oil losses. Furthermore, the crude oil losses were bolstered after the EIA crude oil supply data showed a build of 1.912 million barrels in the week to March 19. Across the Atlantic, the reason for the heavy losses in crude oil prices could also be tied to the latest report suggesting that India – the third biggest oil consumer reported its highest one-day tally of new infections and deaths. Besides this, the broad-based U.S. dollar bullish bias, backed by the fears over the third wave of COVID-19 cases and a delayed vaccine rollout, was also seen as one of the key factors that kept the crude oil prices under pressure as the price of oil is inversely related to the price of the U.S. dollar.

Conversely, the upbeat market mood, backed by the vaccine optimism and hopes of faster economic recovery, helps the higher-yielding crude oil to limit its deeper losses. Also capping the losses could be the reports suggesting that Ever Given got stuck in the Suez Canal, blocking the waterway for 10 tankers carrying 13 million oil barrels. However, the world’s most important waterway blockage and the U.S. supply data were dimmed by increasing COVID-19 and fuel demand worries. At the moment, crude oil is trading at $59.91 and consolidating in the range between 59.88 and 60.87.

At the data front, the EIA crude oil supply data showed a build of 1.912 million barrels in the week to March 19 against forecasts for a 272,000-million-barrel draw and a 2.3 million barrel build, which was reported in the previous week. It is worth recalling that the American Petroleum Institute’s data released the day before showed a build of 2.927 million barrels.At the coronavirus front, the 3rd-wave of coronavirus diseases is getting more serious day by day, which as a result, the fresh COVID-19-induced lockdowns in Europe re-triggered fuel demand worries. Meanwhile, India (the 3rd-biggest oil consumer) recorded its highest one-day tally of new infections and deaths on Wednesday, raising further doubts about the fuel demand worries. As we know, the fuel demand worries getting increase and prices are falling; there are growing hopes that the Organization of the Petroleum Exporting Countries and allies, or OPEC+, will continue their current supply curbs into May when the cartel convenes on April 1.

The bearish crude oil prices could also be associated with the doubts over the Sino-American trade deals, which in turn weighs on the risk sentiment and contributes to the higher-yielding crude oil losses. Despite these negative factors, the market trading sentiment represents positive performance on the day as the positive environment around the Asia-Pacific stocks and upticks in the S&P 500 Futures tend to highlight the risk-on mood being supportive by the latest renewed vaccine optimism and hopes of faster economic recovery. This came after the Anglo-Swedish drugmaker AstraZeneca’s vaccine showed 76% efficacy over the coronavirus (COVID-19) and 100% ability to battle the headline virus. Furthermore, the reason for the risk-on market sentiment could also be associated with the U.S. Senate’s latest voting on the extension of the Paycheck Protection Program (PPP) beyond the March 31 expiry and hints over a $3.0 trillion infrastructure spending plan. However, these positive headlines help the crude oil prices to limit their deeper losses, at least for the time being.

At the USD front, the broad-based U.S. dollar managed to extend its previous day’s positive moves. It remained well bids on the day amid concerns over a third- COVID-19 wave in Europe, potential U.S. tax hikes, and escalating tensions between the West and China, which triggered safe-haven demand and contributed to the greenback gains. However, the U.S. dollar rose, making commodities priced in the currency more expensive, which became the key factor that kept the crude oil prices under pressure. Meanwhile, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.04% to 92.650 by 9:53 PM ET (1:53 AM GMT). Looking forward, the market traders will keep their eyes on the US GDP and speeches from the central bankers of the U.S., Europe, and the U.K. Good luck!

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments