WTI Crude Oil Turns to Growth Trends as OPEC Bounce Fades

Crude Oil, OPEC, Asia Preview – TALKING POINTS

• Crude oil prices initially bounced on OPEC cuts, fading optimism could see gains erased

• World Bank published Global Economic Prospects report, analysts sent a chilling message

• Crude oil prices continue to climb along April uptrend but can they clear the March 6 drop？

Wall Street ended the day in the green with the S&P registering 1.70 percent gains and is now less than five percent away from its pre-selloff high. Energy shares were the best performers in the index when broken down by sector, ending the day 4.32 percent higher on average. Foreign exchange markets were somewhat mixed. The anti-risk Japanese Yen rose with AUD and NZD while the US Dollar and HKD ended in the red.

The World Banks Global Economic Prospects report casts a deep and dark shadow over global growth and financial stability, thought it failed to generate significant volatility. Analysts anticipate for global growth to shrink over five percent in 2020, marking the deepest contraction since World War II. The report also warned that:

“If the past is any guide, there may be further growth downgrades in store, implying that policymakers may need to be ready to employ additional measures to support activity.”

Tuesdays Asia-Pacific Trading Session

With little planned event risk, commodity and foreign exchange markets will likely put their focus on fundamental themes. Crude oils decline during Wall Street trade may carry over into Asia by the same fundamental distress of insufficient demand in a contracting global economy. Petroleum-linked FX like the Canadian Dollar and Norwegian Krone may suffer with it.

Crude Oil Outlook

Crude oil prices continue to climb along the late-April uptrend, though failure to clear the pre-March 6 OPEC meeting could cast a bearish shadow over Brent. If the commodity capitulates and the uptrend breaks, crude oil prices may retest support at 36.45. Conversely, if traders remain resolute in cracking the ceiling at 45.51, a breach there with follow-through could prolong crude oils rally.