Over to you, Prince Abdulaziz bin Salman
Naturally, restrictions and lockdowns don’t sit well with oil traders and crude prices are taking another kicking today.
Brent and WTI are off around 5% at the time of writing and could come under more pressure as Covid fears mount. One thing they have working in the other direction that they lacked in March was an organized OPEC+, which should prevent a repeat performance.
There’s no oil price war, production is already well below the levels it was earlier this year – among both OPEC+ and others – and the group stands ready to act at the first sign of trouble. That may just come much earlier than they anticipated. Saudi Arabia’s Energy Minister last week effectively dared traders to short the market, today it’s off 5%. We may not have to wait long for a response but in the short-term, lockdown panic may weigh.
Precious metals tumble as dollar favoured
Precious metals are coming under considerable pressure in what is looking like a repeat of earlier this year.
The safe haven is once again not providing shelter in these hazardous times. The dollar is instead making strides higher which is further pressuring commodity markets and taking gold with it.
Silver, gold’s more volatile sibling, has fallen off a cliff, losing more than 11% at one stage before paring losses to a seemingly more respectable 8% decline. Gold is only off a little more than 2% but threatening to break $1,900 having spent a litte time beneath there already since the US joined.
It will be interesting to see how much investor sentiment is shaken by today’s moves. It’s certainly an interesting start to the week and one that will catch the attention of policy makers that have been prepared for this for months.
How quickly will they look to arrest the panic in the markets that, as we’ve seen before, can get out of control quickly and how confidence are market participants that they can and will?
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.