Oil trembles amid fading stimulus hopes, but for Asia commodity traders, the Golden Week is a particularly treacherous time of the year.

Crude oil price viciously dipped mainly amid deep scepticism from US House Speaker Pelosi on the possibility of any US stimulus.

Whether posturing for a better deal or political grandstanding makes no difference to the oil markets where fundamentals are not supportive, a move higher is only possible if a fiscal agreement is reached.

Oil traders, many of whom have given the benefit of the doubt to the Pelosi -Mnuchin brokered US fiscal deal, found themselves at the wrong end of the stick. They were caught long and wrong as oil prices fell off the table on headline havoc.

Running against the grain, with implied demand softening and the odds of a deal skewed against a deal happening this week, was always going to be a difficult journey.

It will be a considerable disappointment to the street if both parties leave the negotiating table without putting a deal to the Senate for a vote.

My concern for the deal not getting done is that only one-third of the Senate is up for re-election in November, of which 23 seats are Republican. At this point, only four of those seats are genuinely at risk of falling into Democratic hands. That means most Republican senators have no trouble standing pat.

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 gets 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.

Golden Week a treacherous time for commodity traders

Oil is susceptible to any negative news, but the Golden Week period for Asian commodity traders is a particularly treacherous time of the year. It was both industrial metals and energies that fell under considerable pressure.

As oil was getting knocked, copper is the one faring the worst. While copper stocks have increased considerably, LME inventories are now at 163k tonnes, with over 75% on warrant. An increase of 2kt in the last three days, the moves are more extreme due to the lack of Chinese participants who had been active buyers on dips.

Oil markets analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi