fxstreet.com 23 Feb, 2021 17:00 am

WTI recovers from brief trip below $61.00 following dovish Powell remarks

WTI recovers from brief trip below $61.00 following dovish Powell remarks
Crude oil markets entered Tuesday’s Asia Pacific session on a bullish note, with front-month futures contracts for the American Benchmark of sweet lig

Dovish remarks from Fed Chair Jerome Powell have helped lift stocks and crude oil from earlier lows.Crude oil markets entered Tuesday’s Asia Pacific session on a bullish note, with front-month futures contracts for the American Benchmark of sweet light crude, called West Texas Intermediary (or WTI), rallying to within a whisker of the $63.This has exerted downwards pressure on crude oil markets, with WTI having dropped back below the $62.This is a dovish take on the inflation outlook compared to many market participants and seems to have helped stocks (and crude oil) recover, though crude oil would likely do well in a high inflation environment.

Crude oil factors Fedspeak and stock market price action aside, demand-side fundamentals continue to look broadly positive; vaccine rollouts continue in major economies (US is getting huge vaccine deliveries from Pfizer and Moderna over the next few weeks) and both the US and UK look to be on the road back towards reopening.Supply-side factors are a little more mixed; Texas crude oil production appears to be returning more slowly than market participants had anticipated and the impact the recent weather disruption will have had on weekly crude oil inventory data is yet to be seen.

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