Crude Oil Soars Over $61 – Brace for API Report Today!
Arslan Butt • 3 min read
During Tuesday’s Asian trading hours, WTI crude oil managed to stop its previous session’s bearish moves and drew some modest bids around above mid-$61.00 mark mainly due to the hopes of a $3.0 trillion infrastructure plan of U.S. President Joe Biden, which underpinned the market trading sentiment and contributed to the higher-yielding oil prices. Meanwhile, the upticks in the market sentiment were further bolstered by the upbeat reports suggesting that 90% of the adult U.S. population will be eligible for vaccination by April 19. Besides this, the reason for the crude oil gains could also be associated with the fresh reports suggesting that Saudi Arabia is ready to accept an extension of the production cuts through June and is also set to continue voluntary unilateral curbs amid the third-wave of coronavirus lockdowns. Moreover, the losses in the U.S. dollar, triggered by the low safe-haven demand, were also seen as one of the key factors that kept the oil prices higher as the oil price is inversely related to the price of the U.S. dollar. On the gloomy side, the escalating coronavirus (COVID-19) woes in Europe and Australia, and Western tussle with China probes the oil bulls.
WTI is trading at 61.50 and consolidating in the range between 61.36 and 62.25. Moving on, the traders seem cautious to place any strong position ahead of the U.S. crude oil supply data from the American Petroleum Institute, which is due later in the day. Despite the escalating coronavirus (COVID-19) woes in Europe and Australia, the market trading sentiment managed to extend its previous day’s positive moves and still represent positive performance on the day as the bullish appearance of Asia-Pacific stocks and upticks in the U.S. stocks futures tend to highlight the risk-on mood. However, the reason behind the risk-on market sentiment could be the hopes of a $3.0 trillion infrastructure plan of U.S. President Joe Biden.
Meanwhile, U.S. President Joe Biden said that 90% of the adult U.S. population would be eligible for vaccination by April 19, which also adds optimism around the market sentiment. Elsewhere, the UK, France, and Germany’s willingness to cooperate add to the market’s optimism. Thus, the upbeat market mood played its major role in underpinning the higher-yielding crude oil prices.As a result, the broad-based U.S. dollar failed to extend its overnight bullish traction and turned bearish on the day as risk-on market sentiment, backed by the optimism over a possible vaccine for the highly infectious coronavirus disease, played a major role in undermining the safe-haven dollar. The U.S. dollar failed to gain any meaningful traction from quickening vaccine rollout and the prospect of more stimulus measures in the U.S. In that way, the losses in the U.S. dollar became the key factor that kept the oil prices higher as it is inversely related to the price of the U.S. dollar. Meanwhile, the U.S. Dollar Index which tracks the greenback against a bucket of other currencies dropped by 0.03% to 92.927 by 10:14 PM ET (2:14 AM GMT).
Moreover, the gains in the crude oil prices took further pace after Saudi Arabia has indicated that it will accept an extension of the production cuts through June and continuing voluntary unilateral cuts amid rising numbers of COVID-19 cases in Europe dampen fuel demand recovery hopes.
On the darker side, the escalating fears of rising COVID-19 cases in Europe, Australia, and some of the notable Asian nations like India are continually fueling the fears of renewed lockdowns in several countries. As per the latest report, the number of global COVID-19 cases exceeded 127.58 million as of March 30. The US-China tussle remain on the cards as the Western friends eye for stronger cooperation across the pond. On the negative side, the U.S. is planning moves to make it easier for diplomats to meet Taiwanese officials. In the absence of the major data/events on the day, the market traders will keep their eyes on the U.S. crude oil supply data from the American Petroleum Institute, which is due later in the day. In the meantime, the risk catalyst like geopolitics and the virus woes will not lose their importance. Good luck!