During trading in Asia on Friday, WTI Crude Oil did not extend its long winning streak, falling below the $ 58.00 level as OPEC cut its demand forecast, saying global fuel demand will recover more slowly by 2021 than it should. previously thought. Meanwhile, the International Energy Agency said supply still exceeded global demand, although COVID-19 vaccines could help with recovery.
Aside from this, the weaker-than-expected U.S. consumer price index (CPI) data released yesterday raised doubts about the U.S. economic recovery and contributed to growing fuel demand concerns. The bearish sentiment surrounding crude oil prices has intensified further as Japan has extended activity restrictions in ten regions, while the Australian state of Victoria may also announce a new blockade amid the emergence of cases of virus variants. On the other side of the lake, the strength of the broad-based U.S. dollar was also seen as one of the key factors undermining the price of crude oil, as the dollar tends to move inversely towards oil. In contrast, the previously released, larger-than-expected incorporation into the U.S. stock and the continued hope for COVID-19 vaccinations has become a key factor, which helps limit deeper losses of crude oil. Meanwhile, President Joe Biden’s promise to announce billions of dollars in new COVID-19 relief measures has eased concerns about the global economic slowdown, which could also provide some support for oil and limit its bearish accumulation.
In addition, Saudi Arabia’s promise to reduce production has played a big role in supporting oil prices. Crude oil is currently trading at $ 57.81 and is consolidating in the range of 57.72 to 57.97. At the data level, U.S. Department of Energy Information (EIA) U.S. crude oil supply data showed 6.644 million barrels of withdrawals for the week ending Feb. 5, well above the 985,000 barrels structure and 994,000 barrels of construction reported the previous week. . Data from the American Petroleum Institute on Tuesday showed a fate of 5.821 million barrels.
On the bear side, the number of viral cases still shows no signs of slowing, as a result of which Japan has extended activity restrictions in ten regions, while Victoria in Australia has also announced new closures due to the emergence of a number of cases. of the virus variants. Thus, the trouble with COVID-19 keeps the energy industry under pressure, damaging higher-yielding oil. In addition, a recent phone call between the presidents of the United States and China kept alive old debates and revived geopolitical fears, which were seen as a key factor in putting pressure on market trade sentiment and contributing to higher oil prices.
Despite the worst U.S. employment data, the broad-based U.S. dollar managed to halt the declining series of the previous session and became upward during the Asian session that day as traders invest more in safe-haven assets such as the U.S. dollar. amid unfavorable market sentiment. U.S. dollar gains were seen as one of the key factors driving pressure on oil prices, as a weaker USD tends to make it cheaper for other currency owners to buy crude oil. The U.S. dollar index, which tracks the green gap against a bucket of other currencies, is close to 90,468.
In addition, the Organization of the Petroleum Exporting Countries (OPEC) has announced that global oil demand will recover more slowly by 2021 than previously thought. Meanwhile, the International Energy Agency (IEA) said oil supplies continue to exceed global demand, raising doubts about the recovery in fuel demand.
On the positive side, Saudi Arabia’s promises to reduce emissions unilaterally provide some support for crude oil prices and limit its losses. In addition, additional stimulus measures are expected to be taken by US President-elect Joe Biden, who could also help with oil prices.
Going forward, market traders will be watching the chatter around the U.S. aid package and virus updates; meanwhile, U.S. consumer perception in Michigan will be key. Good luck!