WTI Crude oil supported but unable to prolong previous day’s bullish rally, remaining depressed at around 41.40 as the next wave of global stagnations threatens to once again undermine demand for crude oil, which continues to put pressure on crude oil prices van. Let me remind you that the price of crude oil recovered earlier this week after Pfizer announced that it had achieved a 92% success rate in testing the COVID-19 vaccine. Oil prices continued to improve when OPEC member Algeria hinted that OPEC + could deepen the group’s production cuts in January.
Nevertheless, the rise in crude oil prices was temporary or short-lived, amid mixed signs of a coronavirus (COVID-19) and U.S. election results, not forgetting OPEC’s demand outlook. Apart from that, the heavy losses in crude oil can also be attributed to the latest reports, which suggest that OPEC’s oil production in October rose by 320,000 BPD following the resumption of production in Libya. Meanwhile, the widespread US strength. The dollar, supported by a mixed market sentiment, also plays a major role in lowering the price of crude oil, as the price of oil is inversely related to the price of the US dollar.
But the loss of crude oil was limited by further stimuli and widespread hopes of coronavirus vaccination, which somewhat revived hopes for a continued recovery in global energy demand. Currently, the price of crude oil is $ 41.47, and consolidation ranges from 41.39 to 41.67.
On the downside, concerns about a second wave of the coronavirus and fears of a renewed closure around the world continue to threaten the recovery in demand for crude oil. It should be noted that the coronavirus (COVID-19) causes significant damage in the United States. According to the latest report, the country registers registered cases daily, more than 100,000 per day. Virtually every U.S. state is steadily increasing its COVID-19 status report, as well as a record number of hospitalizations and more than 100,000 cases per day in recent days. As a result, New York announced 10 hours. curfew in bars, gyms and restaurants to curb the spread. It is worth mentioning that in the United States, COVID-19 hospital care currently exceeds 60,000.
In addition to the United States, Europe re-introduced closures last week, putting further pressure on oil demand. According to the latest report, Sweden has announced a partial closure and closed bars and restaurants for the first time since the virus began. Thus, back-and-forth locking restrictions will have an immediate negative impact on transport fuel as more people stay at home in the evening.
In addition to the virus problems, the reason for the price of bear crude oil may also be related to the permanently accelerating US-China struggle. On the other hand, the resumption of oil production in Libya continues to fuel oversupply concerns, which have also played an important role in lowering crude oil prices. It was also reported that OPEC’s oil production in October rose by 320,000 BPD.
Apart from this, the decline in crude oil prices has intensified further after OPEC lowered its forecast for global oil demand growth, reducing it to 6.25 million barrels per day (BPD) by 2021 in the July report. OPEC added that demand for crude oil is expected to be severely detrimental to transportation.
However, the mood of market trading has been flashing mixed signals since the start of the day. As a result, mixed trade can be attributed to mixed signals about the coronavirus (COVID-19), and global monetary policy is moving, not forgetting the U.S. election results. It should be noted that leading vaccine manufacturers such as Pfizer and Moderna are constantly struggling to find the best cure for the deadly virus. Rumors of a U.S. stimulus and further improvements in U.S.-Japan relations, in addition to democratic leadership, have also helped limit losses in market trade sentiment.
As a result, the broad-based U.S. dollar was unable to extend its overnight growth series and came under some selling pressure during the day amid widespread risk market sentiment. Moreover, green background losses may also be related to the increasing rate of COVID-19 infection in the U.S. and Europe, which continues to fuel doubts about the U.S. economic recovery. However, losses in the U.S. dollar have become key factors that have contributed to limiting crude oil price losses. This has raised oil prices higher as the price of oil is inversely related to the price of the US dollar. Meanwhile, the U.S. dollar index, which follows the dollar index against a bucket of other currencies, fell to 92,922.
On the bullish side, the decline in crude oil prices was further limited when OPEC member Algeria hinted that OPEC + could deepen the group’s production cuts in January. It should be noted that Algerian Energy Minister Mohamed Arab said the day before that OPEC + is likely to extend the period of oil production until 2021 or deepen them, depending on market conditions. These positive comments helped limit the depressive loss of crude oil.
Moving forward, market traders are monitoring the U.S. economic calendar, which highlights the latest data on U.S. inflation and unemployment claims. Until then, updates to the Brexit trade talks will no longer be relevant that day. Good luck!