Oil – the catalyst for the crisis?

By 22/04/2020News
Morning Stock News

Gold   1693,50
(+0,36%)

EURUSD   1,0849
( -0,06%)

DJIA  24115
(+5,19%)

OIL.WTI  25,095
(+91,71%)

DAX   10609
(+ 3,20%)

Tuesday turned out to be negative for most markets due to a serious drop in energy prices. In some cases, the news of oil fall overshadowed the news of coronavirus pandemic. Many investors switched to the analysis of a completely different situation.


GBP/USD

GBPUSD

Due to a sharp drop in oil markets on Tuesday are in red. Sales are moderate and there is no serious panic. We should not expect the situation to improve yet, and the sale of assets is likely to continue in the coming days. European markets on Tuesday also failed to hold out due to the collapse of the oil market and fell throughout the trading session. DAX closed at 10249, which is 3.99% below the opening. S&P500 dropped 2.8%.


Pound Sterling

The pound remains under pressure due to fears of weak inflationary data as well as frustrations over Brexit. No matter how hard Britain tries, quarantine and the spread of coronavirus will affect the kingdom’s economy. If the inflation data comes out lower than predicted, the pound is likely to continue falling against the US dollar. GBP loses more than 1% against the US dollar on Tuesday and trades at 1.2280.


Oil

As might be expected, the oil crisis continues. The reason for the short-term decline in oil is logistical problems. Due to quarantine, there are big problems in transport hubs and lack of free tankers, as the contractor is obliged to take this oil on board of a ship after purchasing a contract in May and pump it into storage. In the current situation to find a free tanker, as well as the storage was a very difficult task. Against the background of a major decline in the May contract, the June futures for WTI oil on Tuesday lost 35% of its value. The situation is critical and the decline is likely to continue unless the countries take critical measures.


Gold

Due to the shock in the energy market on Tuesday gold does not feel very well and falls on investors’ worries. Although gold is a metal shelter, but still in critical situations investors prefer to go to the dollar, which is also in its time a currency shelter, which is always liquid in the market. By the end of the trading session in the U.S. there is a good buyback of gold, which indicates a good interest in the precious metal. We still expect the gold to exit above $1700 per ounce and conquer new highs.


What’s waiting for us today?

00.45 UK consumer price index
11.00 Consumer Price Index Baseline in Canada
16.30 US crude oil reserves


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