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COVID-19 Snaps up Oil Traders Long Bias

By:
Olumide Adesina
Published: Oct 15, 2020, 09:00 UTC

Crude oil prices dominated the headlines on Thursday, on recording significant amount of losses at London's trading session.

crude oil

The price plunge is coming on the bias that some oil traders are moving at a steady pace to preserve their capital in the world’s safe-haven currency, the U.S dollar, amid growing geopolitical uncertainty across the market spectrum.

The two major benchmarks for crude oil, Brent crude and West Texas Intermediate futures at the time this report was written lost about 0.6% howbeit remained above $40/barrel and their respective critical support levels.

As if on cue, Crude oil prices have been on a roller coaster in the past few days, as unstable stimulus discussions ongoing at the U.S capitol coupled with resurging COVID cases fast approaching 40 million, dented the oil bulls resolve in breaching above their ceiling price levels.

Major European countries are now looking to restart restrictions and lockdowns amid rising cases of COVID-19 related infections.

Not forgetting India, the world’s third consumer of oil, is on track to overtake the United States on the number of COVID-19 cases, dampening the energy left for the oil bulls to keep prices fairly stable at least for now, on the bias that India is bracing for more upside on the number of COVID-19 infections as it fast approaches its major holiday season.

With COVID-19 onslaughts firing up on all cylinders the magic bullet would be a readily available registered COVID-19 vaccine, though that doesn’t look likely with recent reports coming from many leading pharmaceutical companies.

Traders however will hope for a more realistic one, revealing the oil cartel’s group intent on extending its current quotas on crude oil production cuts into early 2021.

In conclusion, Crude oil price recovery remains very fragile, as reflected through disturbing macros that will most likely affect crude oil demand/supply rebalancing on the sentiments that Covid-19 caseloads exploding beyond prevailing rates look apparent in many major countries.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. He is a Member of the Chartered Financial Analyst Society.

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