Oil rebounds, but will it hold?
29 April 2020 : WTI futures bounced off the $10 support line to trade above $13, as Oil prices endured a tumultuous ride in the markets. Front-end contracts in Oil are being buffeted by fears of another foray into negative territory due to storage limits, which has prompted investors to ditch their June contracts en masse.
Still, the prospects of more major economies re-emerging from lockdown measures may offer some solace to battered Oil prices, even if the reopening process will surely be a gradual one. More importantly, these economies must remain open in order to put Oil on a firmer footing. A second wave of coronavirus cases that prompts another round of lockdowns in major economies would only spell another disastrous period for Oil prices.
Overall, this year’s global recession is set to cap the upside for Oil, while its immediate priority is to stabilise and find the bottom. Such ambitions would be aided by further signs of a slower build in inventories or waning incoming supply, along with more concrete evidence that Covid-19 is past its peak.
Source: Han Tan, Market Analyst at FXTM
29 April 2020 : WTI futures bounced off the $10 support line to trade above $13, as Oil prices endured a tumultuous ride in the markets. Front-end contracts in Oil are being buffeted by fears of another foray into negative territory due to storage limits, which has prompted investors to ditch their June contracts en masse.
Still, the prospects of more major economies re-emerging from lockdown measures may offer some solace to battered Oil prices, even if the reopening process will surely be a gradual one. More importantly, these economies must remain open in order to put Oil on a firmer footing. A second wave of coronavirus cases that prompts another round of lockdowns in major economies would only spell another disastrous period for Oil prices.
Overall, this year’s global recession is set to cap the upside for Oil, while its immediate priority is to stabilise and find the bottom. Such ambitions would be aided by further signs of a slower build in inventories or waning incoming supply, along with more concrete evidence that Covid-19 is past its peak.
Source: Han Tan, Market Analyst at FXTM
