- WTI edged lower on Tuesday amid a modest intraday USD rebound from two-year lows.
- Hopes of US fiscal stimulus offset weak fuel demand outlook and helped limit the downside.
WTI crude oil remained on the back-foot through the mid-European session and was last seen trading with modest losses, around the $41.25-30 region.
The commodity failed to capitalize on the previous day’s goodish intraday bounce from the vicinity of the key $40.00 psychological mark and met with some fresh supply on Tuesday. A strong intraday US dollar bounce from two-year lows turned out to be one of the key factors that exerted some pressure on dollar-denominated commodities, including oil.
The USD was back in demand amid hopes of some sort of an agreement over the next round of the US fiscal measures. The optimism helped offset concerns about fuel demand outlook – led by the continuous rise in coronavirus cases across the globe – and helped limit the dip, rather assisted the black gold to find some support near the $41.00 mark.
Meanwhile, the greenback struggled to preserve its early gains amid dovish Fed expectations. This, in turn, extended some additional support to oil prices. Investors now seemed to have started pricing in some more stimulus by the Fed amid worries that the economic recovery in the US could be grinding to a halt in the wake of the resurgence in coronavirus cases.
Moving ahead, market participants now look forward to the US economic data for some impetus. Tuesday’s US economic docket highlights the release of the Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index. This along with a report on the US inventory by the American Petroleum Institute (API) will play a key role in influencing oil price dynamics on Tuesday.
Technical levels to watch
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