Market Analysis

The picture for oil investors remains bleak


A day of mixed feelings in the financial markets with investors torn between the positive news that cases and fatalities are starting to come under control in the coronavirus main epicentres on one hand, and disappointing earnings and another bad day for oil on the other. It looks as though the glass half-full view is just about prevailing, with risk-related currencies edging ahead. The euro is up about 0.1% against the dollar, while the pound is up against all majors as Covid-19 appears to be coming under control in the UK, with two consecutive days of drops in new cases and fatalities.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader


The picture for oil investors remains bleak with the June WTI contract falling to $10 with attention already switching to the expiry of this contract with the painful memory of sharply negative prices when the May contract expired still fresh in the mind. Traders’ unwillingness to be caught with any barrels when the June contract expires also explains the strong contango with the June expiry trading at close to $10 on CME while the prices for July and October are 70% and 140% higher respectively. Moreover, investors are expecting demand to slowly recover in the third quarter of 2020, helping US tanks to avoid another “no vacancies” situation.

The trend is clearly bearish for Brent too but the scenario seems much more under control, with price just below $20. The possibility of transporting it and the specific characteristics of the underlying contract are making Brent much more resilient in the current storm.

Carlo Alberto De Casa – Chief analyst, ActivTrades

Source: ActivTrader



Stock markets in Europe lacked a clear direction on Tuesday following a similar trend on Asian benchmarks. The risk appetite is still alive this week but investors remain torn between reassuring data on the virus front and poor earnings results. Lower infection rates almost everywhere seem to suggest the market bottom may now be behind us. However, despite the looming reopening of economies, traders prefer to contain their enthusiasm and wait for a cure, vaccine or proof the virus has been fully contained in order to avoid a second wave of cases, which would be dramatic for people as well as for economies. In Europe, most investors and bankers will wait for the EU Commission’s details around new capital-relief measures to help the banking industry sustain businesses in the struggle against the pandemic. Unsurprisingly then, financial shares are among the top movers in Europe today with companies like Allianz, BNP, Société Générale and BBVA helping the Stoxx-600 edge slightly higher. The Italian FTSE-MIB Index is still the eurozone’s best performer and is now trading above 17,550pts. Technically speaking, the price will have to clear 17,835pts in order to unlock a potential cross of the bearish Ichimoku cloud and rise up towards 19,640pts. The Chiko-span has cleared both the price barrier and the Tenkan-Sen, which are the first steps of a trend reversal but the cloud thickness may prevent the market from going higher, at least temporarily.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader


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