Petrocurrencies likely to benefit from more stable markets

While oil prices are showing volatility following the announcement of OPEC’s production cuts, prices could remain more stable moving forward, now that markets know what to expect from the group—no Thanksgiving Day surprise.

“Petrocurrencies will benefit from the decision as prices will keep near current levels despite higher shale production,” Senior Currency Analyst at Market Pulse Alfonso Esparza told Oil & Gas 360®. “The Canadian dollar, Australian dollar, and the Norwegian krone will appreciate as long as crude prices are stable.”


usdcad Canadian dollar graph, May 25, 2017

Stronger petrocurrencies, particularly the dollar, create downward pressure on oil prices as the cost of purchasing crude for holders of other currencies increases. The dollar strengthened at the start of the year following the election of President Donald Trump but has since given back most of the gains.


usdcad Canadian dollar graph, May 25, 2017

U.S. – OPEC tug-of-war
“Oil prices will continue to be caught between the U.S. rising production and the efforts of the OPEC to reduce the glut,” added Esparza.

“Demand for energy continues to stagnate which makes the showdown even more intense as the U.S. exports have begun to move into markets usually dominated by OPEC members.”

via OilandGas360

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza