Oil traders are presently in an unstable state after rising COVID-19 cases in key emerged markets(United States and Western Europe), distorted the mind of global investors, throwing all caution to the wind, as they flocked in mass to the safe-haven currency.
The stronger greenback is the clearest hint that crude oil traders have little or no interest in holding risk, especially in assets like commodities, in which the black liquid hydrocarbon derivative falls in.
Recall that the US Federal Reserve Chairman Powell had earlier rattled the mind of traders with a discordant economic warning, showing that the global economy might be experiencing bumps, triggering West Texas Intermediate, to trade below $40/barrel.
Taking a look critically at WTI most recent price action, it’s notably observed that demand falls around $41.50-$40.50/barrel for four consecutive trading days, with prices falling by 4% on Monday.
Oil bears will resolve to breach below $39.00 price level in the coming days, despite the Oil Sherriff’s recent calls at hampering oil sellers’ momentum.
With the energy market looking bearish, any macros showing weak demand or perceived threat to the global economic recovery sending prices of crude arbitrarily lower.
In addition, oil bulls resolve have been damped on growing concerns about more stringent social -mobility restrictions as the COVID-19 virus onslaught explode globally, coupled with the macro on the United States revealing a death toll of more than 200,000, and shows no signs of coming down in the near term.
Finally the oil market’s sensitivity to COVID-19 has strengthened; with movement of crude oil bulls tamed as the Covid-19 attack continue to make headlines, which could trigger a bearish run in its price action in the near term
Read More: Oil Traders Slam their Brakes on Stronger Dollar, Rising COVID-19 Attack