Oil prices gained 3% on August 23, 2021, breaking the longest losing streak since 2019 of seven straight sessions in the red, as investor risk appetite increased and the United States dollar softened.
WTI Crude had jumped by 3.19% by 8:04 a.m. EDT on Monday, to trade at $64.10 and the prompt price of Brent Crude was trading up by 3.24% at $67.27.
A weaker United States dollar and China bringing local Coronavirus cases back to zero after around one month of drastic restrictions on movement encouraged crude oil buying in the market that settled lower on Friday for the seventh straight day, the longest losing streak since 2019.
In the past week, the strong US dollar, the threatening Delta variant cases in most of the major economies, and the Fed’s signal that it would begin tapering stimulus caused a panic sell-off on the global markets, with risk assets and commodities beaten the worst.
On Friday, Dallas Federal Reserve President Rob Kaplan stated that he might rethink his call on the Federal Reserve to begin tapering the asset-buying program in case the Delta variant slows economic growth in the US.
The world’s top crude oil importer, China, reported zero local cases of COVID-19 after weeks of localized lockdowns and suspension of public transport services ad flights, which took a major toll on fuel demand. Vanda Insights wrote in a note early on August 23, 2021:
“Crude futures resumed trading for a fresh week with an upward bounce as some buying on the dips crept into the broader financial markets after last week’s hammering of risk assets.”
The markets will be closely watching the Jackson Hole yearly symposium of the Fed this week, which is set to be held virtually, for signs when the Fed may start tapering the stimulus asset purchase program. Saxo Bank said in a market commentary on Monday:
“While the virus remains a threat to the short-term demand outlook, despite signs of an improving situation in China, this week’s Jackson Hole summit may give the market some ideas about the timing of tapering.”