Crude oil prices drop over 8%

Oil futures dropped at its last trading session, contributing to a second weekly loss for crude oil prices as President Donald Trump’s COVID-19 diagnosis raised further concerns over a slowdown in the global economy.

“Rising coronavirus cases across the globe fan fears around slowing world growth and pace of demand recovery,” said Lukman Otunuga, senior research analyst at FXTM. Trump’s diagnosis has led to risk-off sentiment, “consequently hitting appetite for oil.”

West Texas Intermediate crude lost over 4% on Friday to settle at $37.01 a barrel on the New York Mercantile Exchange. The contract prices lost roughly 8% for the week.

Crude oil prices also dropped lower after US House Speaker Pelosi failed to secure a stimulus deal package with the U.S Treasury Secretary on Friday.

Stephen Innes, Chief Global Market Strategist at Axi spoke on other vital fundamentals disrupting the energy market and the present bias investors have on crude oil by saying;

“I believe investors are very reluctant to give up their overall bullish bias even when positive drivers such as the ultra-dovish US Fed and the prospect for vaccines and new fiscal stimulus get questioned.

This makes a lot of sense to me as all three of them will likely remain critical supportive factors in the medium term, even if they temporarily disappoint in the short term.

“How that plays out for the oil market remains the big mystery question. Still, the investor mindset should remain one of looking for buying opportunities for riskier assets, funded with dollar shorts, and, hopefully, a pop higher on oil prices due to the currency and knock-on inflationary side effects”

It’s fair to also say the oil market’s sensitivity to COVID-19 has strengthened; with upward moves curbed momentarily as the COVID-19 attack takes another precedence which could trigger a continual bearish run in its price action in the near term.

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