Oil Price Fundamental Daily Forecast – Buyers on Sidelines as Demand Concerns Cap Gains

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Friday shortly before the regular session opening, but the inside move on the daily chart suggests buyers aren’t showing much conviction. However, some of the concerns during Thursday’s session that drove prices sharply lower are softening so we may actually be seeing some renewed buying.

At 11:29 GMT, May WTI crude oil futures are trading $60.31, up $0.25 or +0.42% and June Brent crude oil is at $63.26, up $0.23 or +0.36%.

Renewed COVID-19 Concerns Capping Prices

On Thursday, prices fell as a new wave of COVID-19 infections moved across Europe, spurring new lockdowns and dampening hopes for a recovery in demand for fuels anytime soon. Several large European countries have reimposed lockdowns as new infections increase again, while vaccinations slow because of concerns about side effects of the AstraZeneca vaccine, which was being widely distributed in Europe.

Germany, France and other countries have since announced the resumption of inoculations after regulators declared the AstraZeneca vaccine safe, but the program halt has made it harder to overcome resistance to vaccines among some of the population.

Crude traders are going to continue to monitor the situation in Europe because another wave of coronavirus could curtail the demand recovery process.

Traders Monitoring Yields, US Dollar

Also on Thursday, a spike in U.S. Treasury yields drove the U.S. Dollar higher, which raised concerns over foreign demand for the dollar-denominated commodity. Today, the situation is mixed with yields inching lower, while the dollar posts a small gain.

Yields are a hot topic at this time and will continue to be monitored because they can turn higher quickly. This could drive the dollar higher, while weakening foreign demand for crude oil.

Daily Forecast

This is going to continue to be the source of uncertainty which could limit buying.

Treasury yields and the U.S. Dollar will remain a volatile situation as long as inflation is predicted to rise. A spike in the dollar could also limit gains in crude oil.

Rising U.S. crude oil and fuel supplies are also a major concern for buyers.

Despite the bad news, we’re only looking at the potential for short-term weakness. As long as OPEC+ continues to tighten output, prices are likely to be supported over the long-run.

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