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

The Fed Is Right—It's Too Early to Cut Rates (I Expect a Decline in #SPX and an Increase in Gold Prices)

The fresh U.S. Consumer Price Index (CPI) data released on Wednesday, although below the consensus forecast, confirmed the persistence of inflationary pressure. This fully justifies the Federal Reserve's reluctance

Pati Gani 10:37 2025-06-12 UTC+2

Trump Threatens Tariffs Again – Markets React

President Donald Trump announced yesterday that he intends to send letters to trade partners within the next one to two weeks outlining unilateral tariff rates. This is ahead

Jakub Novak 09:10 2025-06-12 UTC+2

What to Pay Attention to on June 12? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are set for Thursday, but only a few are truly important. The key reports to highlight are the GDP and industrial production data from

Paolo Greco 05:52 2025-06-12 UTC+2

GBP/USD Overview – June 12: Protests Against Trump and Fed Policy

The GBP/USD currency pair continued to trade very calmly on Wednesday. Naturally, when U.S. inflation data was released, we saw a brief burst of market reaction—though it didn't last long

Paolo Greco 04:07 2025-06-12 UTC+2

EUR/USD Overview – June 12: Is There Light at the End of the Tunnel?

The EUR/USD currency pair continued to trade very calmly throughout Wednesday. The market showed no reaction whatsoever to the seemingly positive news regarding U.S.-China trade negotiations. Why? Because that positivity

Paolo Greco 04:07 2025-06-12 UTC+2

Donald Trump Plans to Suppress the Uprising

For several consecutive days, protests and unrest have continued in some major U.S. cities, sparked by Donald Trump's new immigration policy. This time, the U.S. President has decided to deport

Chin Zhao 00:35 2025-06-12 UTC+2

EUR/USD. In the Shadow of the Trade Deal: U.S. Inflation Report Pressures the Greenback

A mixed U.S. inflation report pressured the greenback. The dollar index returned to 98.00, while the EUR/USD pair refreshed its weekly high, rising to 1.1491. Additional pressure on the U.S

Irina Manzenko 00:35 2025-06-12 UTC+2

Will the Dollar Maintain the Status Quo?

To make accurate predictions about the future, one must examine the past. The more than 10% rally in EUR/USD since the beginning of the year has been driven by four

Marek Petkovich 00:35 2025-06-12 UTC+2

XAU/USD. Analysis and Forecast

Currently, the price of gold remains confined within a weekly range. The key factors supporting price growth include a decision by the U.S. federal appellate court to uphold President Donald

Irina Yanina 18:35 2025-06-11 UTC+2

USD/JPY. Analysis and Forecast

At this stage, the Japanese yen continues to trade within an intraday consolidation range, approaching the two-week low against the U.S. dollar reached yesterday. The main factors influencing the movement

Irina Yanina 18:33 2025-06-11 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.