empty
08.04.2020 09:07 AM
Positive result from OPEC + meeting will lead to the continuation of increase in oil prices (a decline in USD/CAD and USD/NOK pairs is expected)

Prices of crude oil received support after last week's strong growth, following directly the reports from D. Trump who said that Saudi Arabia could begin to lower the production of crude oil by 10 million barrels per day.

It seems that last week has become a reversal for oil prices. Growing hopes that Saudi Arabia, Russia and the US will still begin negotiations on the regulation of crude oil production, while maintaining quotes. On Thursday, OPEC + will meet in a video conference mode at which this issue will be discussed. So far, it is expected that a decision will be made on it to reduce oil production by 10 million barrels per day.

The question arises here: will it be enough to contribute to higher prices?

In our view, the dynamics of oil prices will depend not only on the volume of reduction adopted at the meeting, but also on the situation of the impact of coronavirus on the global economy. Locally, prices at the end of the meeting may receive significant support on Thursday, if the meeting decides to reduce production by more than 10 million barrels per day, and the implementation time will exceed the forecasted three months.and the implementation period will exceed the projected three months. At the same time, if it turns out to be less in volume and terms no more than three months, and other producers of crude oil – the United States, Brazil or Canada refuse to participate in this process, we should expect a continuation of a strong fall in quotes.

Another limiting factor for prices is the entry of the global economy into recession amid the coronavirus pandemic. Slowing economic growth automatically leads to a drop in demand for raw materials and commodity assets - industrial metals and, of course, oil. We believe that the main task facing oil producers is to bring prices back to $ 60 per barrel, and keep them in the range of $ 30–40 per barrel so that they do not collapse below the $ 20 mark, which will lead to the collapse not only in sale, but also oil producers in the traditional way.

Of course, if everything is positive on Thursday, this could serve as a good incentive to continue to cautiously strengthen commodity currencies against the US dollar. At this wave, shares of mining and energy companies will also receive support.

Forecast of the day:

The USD/CAD pair is consolidating above the level of 1.3990 expecting the result of the OPEC + meeting. If it ends positively, the pair will resume a local decline. In this case, we expect it to declinel to the level of 1.3920, and then to 1.3725, if the level of 1.3990 is broken down.

The USD/NOK pair is also consolidating only above the level of 10.1500. If the result of the OPEC + video conference is positive, then we should expect its decline to the level of 9.8650.

This image is no longer relevant

This image is no longer relevant

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/USD. The Pound and Politics

The pound reacted negatively to the results of the local elections in the UK, where the right-wing Reform UK party secured a convincing victory in many districts. However, the British

Irina Manzenko 00:50 2025-05-06 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to show resilience, climbing above the key psychological level of $3300. Geopolitical tensions stemming from the prolonged Russia–Ukraine conflict and escalating hostilities in the Middle East continue

Irina Yanina 17:45 2025-05-05 UTC+2

USD/CHF: Analysis and Forecast

The USD/CHF pair remains under pressure at the start of the new week, attracting sellers for the second day in a row, weighed down by several factors. However, spot prices

Irina Yanina 17:35 2025-05-05 UTC+2

Could the Fed Deliver a Surprise Following Its Meeting? (Possible Renewed Decline in Oil Prices and GBP/USD Pair)

The turbulence of recent months, driven by Donald Trump's actions and the release of fresh U.S. economic data, has done little to help investors understand the true direction of asset

Pati Gani 09:50 2025-05-05 UTC+2

The Market Doesn't Dare to Go Against the Crowd

"Dance while the music plays." The S&P 500 has just completed a 9-day rally—the longest since 2024—driven by a strong U.S. labor market report and upbeat earnings from tech giants

Marek Petkovich 08:49 2025-05-05 UTC+2

GBP/USD Overview – May 5: Bank of England and Fed Meetings

The GBP/USD currency pair failed to show any decisive movement on Friday—it neither rose nor fell significantly. Many analysts interpreted the U.S. labor market and unemployment data as positive simply

Paolo Greco 06:44 2025-05-05 UTC+2

EUR/USD Overview – May 5: A New Week of Ordeals for the Dollar

The EUR/USD currency pair remained flat on Friday. The day saw both upward and downward movements. It is a notable achievement for the dollar that it has appreciated over

Paolo Greco 06:44 2025-05-05 UTC+2

EUR/USD: Weekly Preview. The May FOMC Meeting and (Possible) U.S.-China Trade Talks

The new week promises to be informative for EUR/USD traders. Most notably, the next Federal Reserve meeting, scheduled for May 6–7, will determine the central bank's future course of action

Irina Manzenko 05:53 2025-05-05 UTC+2

What to Pay Attention to on May 5? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic events are scheduled for Monday. The only noteworthy release is the ISM Services PMI from the U.S., but serious doubts exist about whether the market will

Paolo Greco 04:15 2025-05-05 UTC+2

The U.S. Dollar: Weekly Preview

The hit parade of American news and events will continue. I still believe that the most significant factor in the market is Donald Trump's decisions. It's enough to compare

Chin Zhao 00:51 2025-05-05 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.