Crude Oil Prices Rebound from Early Losses but Might not Last for LongCrude oil bulls paused the bearish run recorded earlier at Asia’s trading session as prices rebounded during London’s trading session. Brent Crude was up by over 1% as buying pressures pushed the crude oil derivative above the $40/barrel.
The recent volatility in the energy derivative market was spot on, with both oil international benchmarks printing as high as 1%.
However, market indicators reveal the recent reversal recorded, might not last long, on the basis that the US dollar continued to rally higher, coupled with the surge in COVID-19 caseloads globally
At Asia’s trading session, WTI Crude bears were making big profits as West Texas Intermediate crude breached the $37 price support level. A break lower was an important sell signal, but the Oil bulls paused the bearish momentum, as price rallied back to the $37/barrel price levels.
Crude bears are presently taking advantage of the China’s reduced buying pressure on crude on the fundamental that the second-largest consumer of oil has no space storing additional crude, thereby causing a backlog of oil tankers at its major ports.
In spite of Saudi Arabia, offering huge discounts on its Asian grades with no space for oil in China’s oil storage tanks, the price elasticity of demand is minor.
Also the present bullish run at the oil market might not last long as the prevailing macro reveal, COVID-19 caseloads continue to surge in many parts of the U.S, Europe, and India where the infection rates have not been curbed in spite of lockdowns observed in the affected areas.
The number of cases globally has now approached 27.5 million as of September 9, according to Johns Hopkins University data.
On the geopolitical arena what seems to be the largest macro, keeping caps on crude oil prices upward run is the increased geo-economic tensions between the world’s largest economies as the battle for global technology supremacy between the US and China strengthens.