Market Overview

30 April 2020

Oil is Coming Up Well from the Bottom

Brent crude prices are coming up from the bottom of last week's prices which were below $16 per barrel to above $26. The emersion of crude prices may also be inflated by existing factors in May. These factors may be the decline of the pandemic that crashed the demand for oil. New case dynamics is weakening and many countries are preparing to ease the quarantine restrictions gradually or even substantially. A majority of European countries have already announced such plans. This may lead to an increase in business activity and the demand for oil.

The overall inclination to risks has increased. The CBOE VIX Volatility Index fell from 47.8 to 31.3 points. This is quite a lot. The demand for crude oil might increase as the driving season may gear up the demand for gasoline.

The Federal Reserve (Fed) unprecedented measures, along with other central banks' stimulus moves, lead to a significant increase in money supply. The dovish rhetoric of the Fed this Wednesday just reconfirmed this trend. The excessive amount of liquidity seems to prompt investments in assets of manufacturing companies including oil production. The liquidity pumping by the Fed has promoted a slight weakening of the US Dollar over recent days. The US Dollar Index the last week up to date, fell from 101 points to 99.5 points, this supported the rebound of crude prices. The market is awaiting OPEC++ to start production cuts as was agreed in April.

All the above factors may likely support oil prices in the coming month. However, a significant rise in prices is hardly to be expected since the supply still sharply outweighs the demand. The reserves of crude are extremely high and storage capacities are close to being fullto the top or unavailable for immediate request at more or less reasonable prices. Any of such risks may restore an excessive pressure on prices. Crude prices may experience high volatility in May, likely moving within the range of $21-34 per barrel of Brent crude.


Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Forex Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
37 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2020 TeleTrade-DJ International Consulting Ltd

TeleTrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. TeleTrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies. You may change your cookie consent or view our cookie declaration here.

TeleTrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.