Oil Bears Stage a Comeback Over Resurging COVID-19

Oil traders arbitrarily suspended their bullish bets on macros showing many European countries suspending the use of AstraZeneca COVID-19 vaccines due to fears of possible side effects weighed heavily on crude oil prices at Wednesday’s trading session.

Germany, Europe’s biggest economy is currently experiencing new COVID-19 caseloads while Italy another key Western European country, has imposed a nationwide Easter lockdown.

At the time of drafting this report, the British based oil contract, Brent crude had lost more than 1% to trade at $67.7 a barrel, also the U.S. West Texas Intermediate was down by 0.7%, to trade at $64.3 a barrel.

Though the energy market seems bearish in the near term, oil traders haven’t changed their bullish outlook for the long term yet after US oil stockpiles unexpectedly dropped last week as a narrower weekly draw in gasoline inventories meant that downstream production capacity was normalizing after a big freeze in Texas, a key energy hub.

In addition, oil traders are currently focusing on the outcome of the all-important meeting, knowing fully well the U.S Fed Reserve Bank has limited options in convincing global financial markets that rising inflation rates are not a cause for concern, meaning there are strong indicators that points to a change in narrative amid rising U.S Treasury yields,

Many market experts are however praying that the world’s most powerful central bank will print a clear signal that rates will not increase anytime soon, thereby giving crude oil bulls possible room to break above $70 a barrel as such a move might tame the dollar’s upside at least for the near term.

That being said, the Fed chair faces another tough task of reassuring financial markets.

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