Oil Currencies: CAD and NOK more sensitive to demand than supply shocks – Deutsche Bank
|The OPEC+ and G20 meetings come with huge uncertainty. Economists at Deutsche Bank try to quantify how much the best case scenario would be worth for the oil currencies, CAD and NOK.
Key quotes
“The raw betas imply that a 30% rise in oil prices driven entirely by supply cuts would be worth about 3% and 2% for NOK and CAD, respectively, plus some from any improvement in global risk sentiment.”
“The good news for oil currencies is that about half of this year's decline in oil prices may be due to a supply shock that is still largely in the price, such that a successful deal on comprehensive supply cuts in the coming days would promise a meaningful recovery in oil prices.”
“The bad news is that it is probably the global oil demand shock that accounts for most of the decline in both CAD and NOK this year. Unless or until the global economy ramps up again, even a best case scenario for the OPEC+ and G20 meetings will provide only limited relief.”
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