Risk appetite hits oil prices
Oil prices are not having much fun in the current risk environment which shouldn’t come as much of a surprise considering global growth fears and their impact on risk are intrinsically linked to future oil demand.
It’s one of the often more overlooked drivers of oil prices but the correlation is clear. Oil has been on a slide since Trump claimed to have called OPEC regarding oil prices, which came at a time when the market was already looking rather stretched to the upside.
GBPUSD Daily Chart
We’ve seen a bit of a corrective move since then – just shy of 10% – but that may increase. We’re currently trading at a very interesting level – around $69-70 in Brent and $60-61 in WTI – a break of which could signal more pain to come. Given the recent shift in risk appetite, this is perfectly feasible.
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