Crude Oil Soars Amid Bearish Dollar – Eyes on OPEC+ Meeting!

During Thursday’s Asian trading session, WTI crude oil managed to extend its overnight declining streak & took some fresh bids around the mid-$60.00 level as the supply data from the U.S. Energy Information Administration reported a draw of 876,00 barrels in the week ended Mar. 26, which in turn faded the oversupply concerns and contributed to the gains. Meanwhile, the Organization of Petroleum Exporting Countries and its allies (OPEC+) are scheduled to meet later in the day, wherein they are expected to agree to extend their supply curbs into May.

In addition to this, the reason for the bullish bias around the crude oil prices could also be tied to the latest approval of the Rapid Antigen “Paper Strip” tests for over-the-counter use from the U.S. Food and Drug Administration’s (FDA). In the meantime, Pfizer’s 100% vaccine efficacy for kids also played its major role in underpinning the higher-yielding crude oil prices. Moreover, the easing virus-led lockdown in Australia and upbeat trade and retail sales numbers from the Oz nation also helped the market trading sentiment stay bid. Thus, the risk-on market sentiment was seen as one of the key factors that kept the higher-yielding crude oil prices higher.

On the gloomier side, the fresh spike in COVID-19 cases across Europe and some of the notable Asian nations like India keep urging the authorities to extended restrictive measures such as lockdowns, which in turn becomes the key factor keeping a lid on any additional gains in the oil prices. Furthermore, the broad-based U.S. dollar on-going strength, backed by the rises in U.S. bond yields, was also seen as one of the key factors that cap the upside momentum for crude oil prices as they usually drop when the greenback rises as a higher dollar makes crude oil more expensive for buyers with other currencies. As of writing, WTI crude oil is currently trading at 59.64 and consolidating in the range between 58.88 and 61.17. Moving on, the traders seem cautious to place any strong position ahead of the OPEC+ meeting on output policy.

On the other hand, the Organization of Petroleum Exporting Countries and its allies (OPEC+) are expected to meet on the day to consider options that include an output roll-over and a gradual output increase. Apart from this, the OPEC+ joint technical committee met the previous day but failed to make any formal recommendation. However, OPEC+ is currently restricting output by just over seven-million barrels per day (BPD) to support oil prices and avoid a supply glut. Saudi Arabia, the world’s 2nd-largest oil producer, is additionally cutting a further 1 million bpd, which may lend further support to the oil prices.

Apart from this, the upticks in the crude oil prices took further pace after the U.S. Food and Drug Administration’s (FDA) approval of the Rapid Antigen “Paper Strip” tests for over-the-counter use. Meanwhile, Pfizer’s 100% vaccine effectiveness for kids keeps the oil bulls hopeful. Furthermore, easing virus-led lockdown in Australia and positive trade and retail sales numbers from the Oz nation favor the commodity prices. As a result, the market trading sentiment managed to stop its previous day’s negative moves and start representing 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. Therefore, the upbeat market mood played its major role in underpinning the higher-yielding crude oil prices.

Despite the risk-on sentiment, the broad-based U.S. dollar managed to extend its previous session’s winning streak and took some further bids on the day amid hopes of vaccine rollouts and fiscal stimulus, which pushed the U.S. bond yields higher. However, the market’s low safe-haven demand was seen as the key factor that caps further upside momentum for the dollar. However, the upticks in the U.S. dollar were seen as one of the key factors that kept the lid on any additional gains in the crude oil prices as the price of oil is inversely related to the price of the U.S. dollar. The Dollar Index that tracks the greenback against a bucket of other currencies that rose to 93.343.

On the gloomier side, the escalating fears of rising COVID-19 cases in Europe 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, France entered its third lockdown, with schools to close for three weeks, which became the key factor that kept the lid on any additional gains in the crude oil prices. Also capping the gains could be the US-China tension and downbeat Caixin Manufacturing PMI from Beijing.

Moving ahead, the market traders will keep their eyes on the Organization of Petroleum Exporting Countries and its allies (OPEC+) meeting, which is due later in the day. Moreover, the US ISM Manufacturing PMI for March, which is expected at 61.3 versus 60.8 prior, will also be key to watch. Good luck!