On Monday morning in Asia, the oil market was back in focus. Crude oil futures extended last week’s brutal losses, falling more than 5 percent at the start of the session, before falling more than 20 percent at one point. Volatility remains high and investors will be watching closely. The sub-market dollar index.dxy remained strong in early trading, now trading around 99.90, with a short-term target once again at the 100 marks, while spot gold was under pressure at around $1,677 an ounce, and may face further downward pressure in the afternoon. Investors will continue to watch oil prices, the global outbreak and progress on the U.S. stimulus package after President Donald Trump hinted that an answer could come Monday. Globally, the cumulative number of confirmed COVID 19 cases has exceeded 2.4 million. The United States has had more than 760,000 confirmed cases and more than 40,000 deaths.
The oil market tumbled again. The may WTI contract fell as much as 20%
After last week’s nearly 20 percent slide in oil prices, WTI crude futures bulls continued their nightmare: the may contract fell below $15 a barrel in early Asian trading on Monday, down more than 20 percent on the day.
Despite Saudi Arabia’s historic agreement with Russia to cut output, the market has been haunted by concerns that the cuts will not be enough to offset the drop in demand and that overstocking will add to pressure on oil prices.
“One might have expected this unprecedented cut to lead to a jump in oil prices,” abn amro said in a report. But that didn’t happen.” The bank said the market had already priced in that factor after U.S. President Donald trump said he expected a deal in early April.
U.S. WTI prices have fallen sharply from recent contracts on concerns that the storage center at Cushing, Oklahoma, will run at full capacity. This has led to a disconnect between prices and London brent.
Oil futures investors have been unwinding their long may positions as U.S. inventories surge to record highs and storage facilities run out this summer. Storage tanks in Cushing, Oklahoma, are 69% full, up from 49% four weeks ago, according to the energy department.
Some analysts pointed out that the direct cause of the sharp decline in WTI crude oil futures in May was a rare move to swap months.
Because the futures price of different terms is different, when the futures contract moves to change month, the price will usually jump short phenomenon. The jump is not a sudden rise or fall caused by a major event or unexpected event, but simply a repricing of a new contract.
According to market institutions, the difference between the two futures contracts, which are about to change month, would not normally be large. But this time, the spread between the may and June WTI contracts has reached $7, meaning that futures contracts can roll from one month to the next, increasing the cost of holding the same position by a rare 30 per cent.
The may contract will close on April 21 (02:30 am Beijing time) and most brokers will roll over on April 16-20. In order to avoid being forced to close their positions, some traders tend to cancel the may contract in advance and rebuild their positions under the June contract, resulting in a lot of selling in the may contract and a sharp drop in prices.
“There continue to be concerns that us storage facilities will run out of capacity,” ANZ research said in a report. Since the beginning of march, stocks at Cushing, the pricing point for wti, have risen nearly 50 per cent.”
Storage space is filling up fast around the world, and in some parts of the world where oil is difficult to transport, producers may soon be forced to pay buyers to haul it away, effectively pushing prices into negative territory.
The dollar maintains a strong short-term target of 100
The dollar index.dxy remained strong Monday morning, trading near 99.90 with a short-term target of 100. The dollar index did well overall last week, briefly crossing the key 100 level.
According to FX168’s weekly financial market survey released on Saturday, 33.33 percent of traders and analysts surveyed by FX168 believe the dollar will move higher this week, compared with 16.67 percent who are bearish and another 16.67 percent who believe the dollar will consolidate.
The dollar has moved closely with risk sentiment during the coronavirus crisis. For the past week, the dollar has shown a pattern of volatile gains, briefly breaking the 100 mark on the back of safe-haven demand, but falling back before the weekend.
The international monetary fund (IMF) on Monday forecast that the global economy would shrink by 3% this year, the worst global recession since the great depression. The forecast generally reduced risk appetite, boosting the dollar’s appeal as a safe-haven currency.
“The imf reminds us that things could be much worse than we have seen in recent decades,” said commerzbank’s senior currency strategist. “I think the market is still trying to work out the extent of the impact on the economy.”
“The dollar did better last week as record weak data suggested a longer, more uncertain road to recovery and a darker outlook, adding to appetite for safe-haven assets,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
“We think the improvement in risk appetite requires a weaker dollar,” said Scott DiMaggio, co-head of fixed income at allianz. But as long as these concerns and pressures exist, people will continue to flock to the dollar. “I don’t think it’s going to be easy to see a big move in the dollar anytime soon.”
John Doyle, vice-president of trading at Tempus, said on Friday: “overall, the dollar will remain king for the next few months. Even off last month’s high, the dollar will remain at an all-time high.”
Gold prices may face further downward pressure in the short term
In early Asian trading on Monday, spot gold continued its decline, now trading around $1,677 an ounce. Gold fell as much as 2 percent on Friday as President Donald trump’s new guidelines for reopening the U.S. economy and preliminary data ona novel coronavirus treatment encouraged investors to move into riskier assets.
An article on leading financial website Economies.com said that gold prices had clearly fallen below the bullish channel support line, suggesting that gold prices would begin a correction. According to Economies.com, spot gold will confirm a continuation of the bearish trend after falling below key support at $1,678.45 an ounce. Gold’s next target is $1,635.80 an ounce.
The key resistance was $1713.00 an ounce, according to Economies.com. If this resistance is broken, it will push gold back into bullish territory and reactivate a bullish trend scenario, in which the next major target is $1,775.00 / oz.
Analysts and traders are bearish on gold’s outlook this week, according to FX168’s weekly financial market survey released on Saturday.
Among traders and analysts surveyed in the weekly financial market survey, 50 per cent were bearish, 33.33 per cent bullish and 16.67 per cent consolidation.
Atomic asset management (Hong Kong) co., LTD., founder and fund managers think that on Monday last week above high gold prices since the 1700 fall, closed contour to cross, but the overall uplink channel has not been destroyed, dateline 9 ma line still has strong support, combined with the ETF continue to achieve a net, market trend direction of bullish gold prices unchanged. In particular, the U.S. dollar index rebound last week appeared to be weak, there is a short-term peak risk, so gold is a positive positive multi-factor, this week can 1650 as a long line of defense, long on the idea.
ABN Amro strategist Georgette Boele said improving investor sentiment and a lot of easing in the market, combined with very low interest rates and fiscal stimulus, could push gold higher. “While there are clearly bullish factors in the gold market, there is not going to be a big immediate rally.”
Bart Melek, head of global strategy at td securities in Toronto, sees gold support around $1,670 and resistance not far above $1,724.
“We expect gold to hit $1,800, but not immediately,” Melek said. The average price for the quarter was $1,625. We don’t expect the average price to reach $1,800 until the second quarter of 2021.”
More than 40,000 COVID 19 deaths have occurred in the United States
According to the latest statistics, the global cumulative number of confirmed COVID 19 cases has exceeded 2.4 million and the cumulative number of deaths has exceeded 165,000. At present, there have been six countries in the world with more than 100,000 confirmed cases, among which the United States is still the country with the largest number of confirmed cases in the world, with more than 760,000 confirmed cases and more than 40,000 deaths.
Worldometers world real-time statistics show that as of 9:29 PM Beijing time on April 20, the global COVID-19 cumulative confirmed cases of more than 2.4 million, reached 24,06,905 cases, the cumulative number of deaths reached 165,058 cases. The United States has the highest number of cumulative confirmed COVID 19 cases in the world, with more than 760,000 cases, reaching 763,836 cases, and a total of 40,555 deaths.
US President Donald trump said on April 19 that he had just finished a phone call with Treasury secretary Steven mnuchin. Close to an agreement on additional stimulus, talks with Democrats on Monday may produce a “good” outcome, and there may be an answer on Monday. He also said the outbreak underscored the need for the U.S. to keep its supply chain at home.
Congress set up the program last month as part of the $2.3 trillion COVID 19 epidemic economic rescue plan, but the money has run out. U.S. President Donald Trump has called for a $250 billion increase in small-business lending programs, in a standoff that lasted more than a week, Reuters reported.
Democratic leaders in congress and Treasury secretary Steven mnuchin said April 19 they are close to a deal to fund a program to help small businesses combat COVID 19.
Both Democrats and Mr Mnuchin said they hoped to reach a deal in time for senate consideration early this week. The agreement will mark the latest step in the us government’s comprehensive response to the aftermath of COVID 19.
“I hope we can reach an agreement that will be passed by the senate tomorrow and by the house Tuesday,” Mr Mnuchin said yesterday. But later in the day, aides said it would take time to complete the deal, and it was not clear when a vote would take place in either the senate or the house.
Us vice President mike pence, head of the White House COVID 19 response team, said in an interview that the federal government will continue to encourage state governments to restore normal life in individual states while ensuring safety. Having opened up all the testing laboratories in each state, we are confident that all states will have the conditions to lift the restrictions as soon as possible.
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.” Being granted a “major disaster status” would receive federal aid and allow local governments to exercise emergency powers to protect lives, property and public health after a disaster.
In China, 12 new confirmed cases were reported in 31 provinces (autonomous regions and municipalities directly under the central government) and xinjiang production and construction corps from 0:00 to 24:00 on April 19, among which 8 cases were imported from overseas and 4 from local areas (3 from heilongjiang province and 1 from Inner Mongolia), according to the latest announcement of the national health commission on Monday. No new deaths; Two new suspected cases were imported from abroad (2 from Shanghai).
As of 24:00 on April 19, 31 provinces (autonomous regions, municipalities directly under the central government) and xinjiang production and construction corps reported 1,031 confirmed cases (including 81 severe cases), 77,084 cured and discharged cases, 4,632 dead cases, 82,747 confirmed cases and 43 suspected cases. A total of 725,814 close contacts and 8,694 close contacts under medical observation were traced.
Other major overseas countries, Spain COVID – 19 accumulative total of 198674 cases of the patients, Italy has confirmed 178972 cases, confirmed 152894 cases of France, and Germany has confirmed 145184 cases, the diagnosis of 120067 cases, Turkey has confirmed 86306 cases, Iran has confirmed 82211 cases, Russia has confirmed 42853 cases, Brazil accumulative total 38654 cases, Belgium has confirmed 38496 cases, Canada has confirmed 34813 cases, the Netherlands confirmed 32655 cases over the Swiss confirmed 27740 cases.
World health organization (WHO) director-general tan tak seh thanked the G20 leaders for their commitment to further strengthen the WHO’s role in coordinating the international fight against the epidemic, and thanked Saudi Arabia for it’s us $500 million contributions, he said on Monday.
G20 health ministers issued a statement on 19 April saying that countries should improve their preparedness for pandemics and stressing the importance of using digital solutions in current and future pandemics. The statement also indicated that G20 health ministers would take further action if needed to contain the outbreak and meet again if necessary.