The dollar index hovered above the 100 marks in sub-session on Tuesday (April 28) as international oil prices continued to fall sharply, with WTI crude falling to $11.50 / BBL, down 10% on the day, after a nearly 25% plunge on Monday. On the other hand, international spot gold prices also continued to come under pressure, nearing the $1,700 an ounce mark, as rising U.S. Treasury yields and signs that countries may soon ease a blockade triggered by a novel coronavirus boosted risk sentiment and sent gold prices down nearly $15 on Monday. In terms of the global epidemic, according to the latest statistics, the global cumulative number of confirmed COVID 19 cases has exceeded 3.06 million, and the total number of confirmed cases in the United States has exceeded 1.01 million.
Black Monday for oil
International oil markets closed sharply lower Monday on concerns that oil production cuts in the United States and elsewhere won’t be enough to offset the slump in demand caused by the new outbreak. There are fears that global oil reserves will soon be filled as the coronavirus outbreak continues to disrupt demand.
The us oil fund, popular with retail investors, also weighed on prices after it said it would start selling all contracts for June delivery on Monday in favour of longer-term contracts.
U.S. WTI crude for June delivery ended Monday down 24.56% at $12.78 a barrel, after falling as low as $11.88. Brent crude, the international benchmark, fell 6.76 per cent to $19.99 a barrel.
WTI crude for July delivery fell more than 14 per cent to $18.18 a barrel, while August futures fell more than 9 per cent to $21.50, suggesting Wall Street does not expect a meaningful recovery in the coming months.
WTI crude futures fell more than 30 per cent last week. Last week’s drop would mark the eighth decline in the past nine weeks.
Bjornar Tonhaugen, head of oil markets at Rystad Energy, said: “the market knows the inventory problem is still there and we are heading towards the top of the tank in a few weeks’ time. Action is needed now, because the issue is no longer just a theoretical and distant matter. Time is running out for the producers and if no further action is taken we will enter the final countdown.”
“A key question is whether we can see a repeat of negative oil prices when the contract expires next June,” ing strategists Warren Patterson and Wenyu Yao said earlier. “Given the oversupply environment, inventories are likely to be a bigger problem this time next month, so in the absence of a significant recovery in demand, crude oil futures are likely to be negative again in June.”
Oil prices plunged in New York on April 20, weighed down by a huge glut in the U.S. oil market, the imminent expiration of contracts and a decision by Texas on whether to cut production. U.S. WTI crude fell into negative territory for the first time in its history in May, closing down 306 percent at $37.63 a barrel.
U.S. WTI crude hit an intraday low of $40.32 a barrel on May 20. That is well below the lowest level since the end of the second world war, when monthly data began in 1946, according to the st. Louis fed.
The extreme move underscores the extent of the oversupply in the U.S. oil market. For the first time in history, U.S. crude oil prices have slipped into negative territory, meaning sellers of crude futures must pay a fee to buyers. A similar fate could befall the June contract, which expires on May 19, traders said.
“Can we get to minus $100 a barrel next month?” mizuho analyst Paul Sankey wrote in a note to clients last week. Probably. The physical reality of crude oil is very difficult to deal with, volatile, potentially contaminated, and without refineries it is virtually useless.”
Most market analysts believe the recent agreement between the organization of petroleum exporting countries and a group of non-opec producers to cut output will do little to ease a glut in April and that prices need to fall further to force more oil and gas companies to cut or halt production to restore balance to the market.
WTI crude futures have fallen more than 70 percent this year as a novel coronavirus pandemic shut down major economies and an oil price war between Saudi Arabia and Russia added to the pain. Investors have been selling oil aggressively since early march in response to a 30 per cent drop in demand caused by the outbreak.
Major oil producers agreed earlier this month to cut output by about 10 million barrels a day from may in an effort to stabilize the oil market. But oil inventories are growing rapidly around the world, which could lead to more production cuts.
Diamantino Azevedo, Angola’s resources and oil minister, said: “despite these measures by OPEC, oil producers should be aware that they may be asked to take more drastic measures.
According to Goldman sachs, the world’s leading investment bank, we are not at a turning point where supply and demand begin to balance. It could be four to eight weeks before we can safely declare a bottom in the oil market. This is based on the likelihood that this week will be the peak of missing demand, but uncertainty is high.
Jeff Currie, global head of commodities research at Goldman sachs, said: “the negative price base case will definitely recur. Fundamentally, the chances of this happening again as the contract expires in June are very high.”
International gold price approaches 1700 mark
After falling sharply on Monday, international spot gold continued to fall in Asian trading on Tuesday, hitting as low as $1,703.60 an ounce and now trading around $1,704.
Spot gold fell as low as $1704.45 an ounce in the week to $1714.19 an ounce, down $13.49, or 0.78 percent.
Spot gold prices surged more than $45 last week as President Donald trump’s tweets heightened tensions with Iran, which was the main driver of this week’s rally. Gold hit its highest level in more than a week on Thursday at $1,738.60 an ounce.
Over the weekend, several states announced a resumption of economic activity. According to media reports, on April 24, the first restart in the us Georgia, barbershops, beauty salons, gyms and other business, in Oklahoma, barbershops, pet shops and so on from the 24th began to accept reservations under the resumption of business.
Since the weekend, more than 10 states, including Alaska, Texas, Michigan, Kentucky and Mississippi, have announced their own “restricted” business restart plans, allowing small service businesses to reopen if they follow guidelines and are properly protected. Tennessee also announced that restaurants could reopen.
In Europe, Italy, one of the countries hardest hit by the outbreak, will allow factories and construction sites to return to work from May 4.
The Spanish government says it will consider further deregulation to allow adults to exercise alone in the near future if the decline can be sustained. Children under the age of 14 can walk outdoors with an adult for the first time in six weeks.
The Swiss government has announced that it will gradually relax its epidemic control measures in stages, allowing barbershops, flower shops and building materials markets to operate as well as non-emergency departments and dental clinics in hospitals and clinics from April 27.
Suki Cooper, analyst at standard chartered bank, said: “while the broader macro backdrop remains supportive for gold in the short term, their primary focus is on real yields. Us Treasury yields rose, which ultimately depressed gold prices. Safe-haven buying continued to support gold prices, mainly through ETF inflows and retail demand. So if we see different economies start to open up again, we may see some of the safe-haven demand start to ease.”
However, some analysts noted that unprecedented government stimulus measures around the world still provided potential support for gold prices.
“Even if the blockade is lifted, the world is still far from returning to normal,” commerzbank analysts wrote in a report. The bigger risk is of economic collapse. To deal with this, governments around the world are likely to continue to pour unprecedented amounts of money – much of it made by central Banks. In this environment, gold as a crisis currency should continue to maintain demand, as reflected in ongoing ETF inflows.”
Gold has tended to benefit from widespread stimulus because it is often seen as a hedge against inflation and currency depreciation.
Investors are now turning their attention to the federal reserve meeting, which ends Wednesday local time, and the European central bank meeting, which ends Thursday. As the global economy struggles to cope with the shock of the crisis, major central Banks are back in the game.
Edward Meir, analyst at ED&F Man Capital Markets in New York, said every correction in the gold market has been followed by a wave of bargain buying, which is clearly a big strategy for the gold market right now.
Td securities commodity strategist Ryan McKay said the gold market will continue to perform strongly, especially after a selloff, with further gains this week.
According to an article on Economies.com, the well-known financial website, the four-hour chart shows a moderate decline in gold prices and tests the EMA 50 indicator, which continues to support gold prices. Stochastic hit oversold territory and waited for that to drive gold back to its expected bullish trend within days and in the short term.
As long as it remains above $1,678.45 an ounce, the outlook for gold will remain bullish, Economies.com added. Gold’s first target is $1,747.43 an ounce.
More than 3.06 million cases of novel coronavirus have been confirmed in the United States
According to the latest statistics, the global cumulative number of confirmed COVID 19 cases has exceeded 3.06 million. At present, the number of confirmed cases has exceeded 100,000 in seven countries, among which the United States still has the largest number of confirmed cases in the world, with a total of 1.01 million cases.
Worldometers world real-time statistics show that as of 9:15 PM Beijing time on April 28, global covid-19 cumulative confirmed cases of more than 3.06 million, to 3064,147 cases, cumulative deaths of more than 211,000 cases, to 211,533 cases.
The United States has the world’s largest number of cumulative confirmed COVID 19 cases, with more than 1.01 million cases, reaching 1010356 cases, and the cumulative number of deaths exceeding 56,000 cases, reaching 56,797 cases. That’s close to the number of U.S. military deaths in the Vietnam war. Nearly 60,000 American troops were killed in Vietnam during the decade-long war.
The head of the centers for disease control and prevention, Robert redfield, said on April 21 that the start of winter in the United States could usher in a second, more severe outbreak, with the overlap of the flu season and the new pandemic threatening “unimaginable” strains on the health care system. Redfield said governments at all levels should use the months to prepare, including improving their detection and monitoring capabilities.
US President Donald trump on April 11 declared Wyoming a “state of major disaster” for the new outbreak. For the first time in U.S. history, all 50 states, Washington, d.c. and four overseas territories — the U.S. virgin islands, northern mariana islands, Guam and Puerto Rico — are in a “major state of disaster.”
Other major overseas countries, Spain COVID – 19 accumulative total of 229422 cases of the patients, Italy has confirmed 199414 cases, confirmed 165842 cases of France, and Germany has confirmed 158389 cases, the diagnosis of 157149 cases, Turkey has confirmed 112261 cases, Iran has confirmed 91472 cases, Russia has confirmed 87147 cases, Brazil has confirmed 66501 cases, Canada has confirmed 48242 cases, Belgium has confirmed 46687 cases, the Netherlands confirmed 38245 cases, India has confirmed 29451 cases, A total of 29,164 cases have been confirmed in Switzerland.
From 0:00 to 24:00 on April 27, 31 provinces (autonomous regions and municipalities directly under the central government) and the xinjiang production and construction corps reported six new confirmed cases, including three imported from overseas and three from local areas (three from heilongjiang), according to the latest announcement of the national health commission on Tuesday. No new deaths; One new suspected case was imported from abroad (1 case from Shanghai).
As of 24:00 on April 27, according to reports from 31 provinces (autonomous regions, municipalities directly under the central government) and xinjiang production and construction corps, there were 648 confirmed cases (including 50 severe cases), a total of 77,555 cured and discharged cases, 4,633 dead cases, 82,836 confirmed cases and 9 suspected cases. A total of 731,015 close contacts and 8,014 close contacts under medical observation were traced.
On April 27, local time, the world health organization (WHO) director-general tam kung said, COVID – 19 pandemic is far from over, WHO in Africa, eastern Europe, Latin America and other regions concerned, many countries detection ability is not enough, the data is undervalued, the WHO will continue to be through its regional offices and each country office support working resistance to disease.