WTI has fallen again below $23
On a Monday marked by lower than usual trading activity, due to the holiday in Britain, Hong Kong and Australia, the focus so far has been on the performance of currencies of oil exporting countries, such as Canada, Mexico and Norway, all of which are recording losses against the US dollar. It appears that investors aren’t entirely satisfied by the compromise reached between OPEC and other major oil producers on Sunday. The agreement to a record cut in oil output failed to reassure the markets, with the prevailing sentiment being one of aversion to risk due to fears that the newly reduced production quotas will fail to offset the damage inflicted by the drop in demand caused by the coronavirus crisis. This scenario is punishing not only to the oil price but also to the value of oil producing countries’ currencies versus the dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
Despite the world’s oil producers agreeing to a massive cut of 9.7 million barrels per day, the oil price was unable to hold onto its initial gains as investors are still expecting there to be a global oversupply for the next few months. After a positive gap when markets opened, WTI has fallen again below $23, confirming the bearish trend seen in the first few months of 2020. Almost 70% of the recovery seen after Donald Trump’s tweet about the possibility of an agreement has been lost, confirming the maxim of “buy the rumour, sell the fact”. On a separate note, it is worth noting that Brent is once again performing better than WTI, with a growing spread between the two benchmarks.
Carlo Alberto De Casa – Chief analyst, ActivTrades
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