- WTI is trading modestly in the green on Tuesday in the $76.00 and is more composed after Monday’s choppiness.
- The main oil market driver on Tuesday will be the OPEC+ meeting, which starts at 1300GMT.
Whilst Monday’s session was choppy, perhaps exacerbated at the time by poor liquidity conditions with many Asia Pacific markets and London closed for holidays, oil markets appear to have gained composure on Tuesday. Omicron optimism-related risk-on vibes that have sent US yields soaring and pushed major US and European indices to record highs this week appear to be giving oil markets modest support on, with front-month WTI futures about 20 cents higher on the day and trading comfortable in the $76.00s, up from Monday’s lows in the $74.00s.
“The chief reason behind the return of investor confidence is Omicron,” said an analyst at Oanda. “Yes, the virus variant is much more contagious, but it is not leading to a proportionally larger number of hospital admissions... (so) it won't stop the global economic recovery”. HSBC’s chief multi-asset strategist Max Kettner adds that “UK hospitalisations have increased in the past couple of days, but the link clearly appears to be weaker than during the previous winter wave... As such, the sensitivity of cases to hospitalisations has barely budged so far. If that trend was to continue, that's good news”. The UK’s vaccine minister said on Monday that people currently being hospitalised with Covid-19 are broadly showing less severe symptoms than before. The French finance minister also expressed confidence on Tuesday that despite surging Omicron infections, the government’s 2022 economic outlook remains intact.
OPEC+ is the main oil market focus on Tuesday, with the cartel meeting to decide on future output policy. All indications from insider sources suggest the group will agree to continue with the 400K barrel per day output hikes into February. As to the expected timing, a meeting of OPEC+’s Joint Ministerial Monitoring Committee is currently underway and may culminate in a recommendation for OPEC+ policy. Markets will be more focused on the meeting of OPEC+ oil ministers which is slated to begin at 1300GMT and will actually result in a policy decision. Analysts at RBC Capital Markets said OPEC+ is unlikely to deviate from the current policy given the positive price outlook and pressure from the US to boost supply, as well as given the lack of major new Covid-19 curbs on travel in key markets. “Though Omicron cases continue to climb in key geographies, the absence of widespread lockdown restrictions will likely keep near-term demand concerns in check”.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0800 after upbeat US data
EUR/USD stays under modest bearish pressure and trades near 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.