Oil has not gone crypto

Posted by: Paul Donovan

21 Apr 2020
  • The US WTI oil benchmark gave a negative oil price for delivery in May (UK Brent crude stayed positive). Oil is not behaving like Bitcoin – there are fundamental reasons for the oil price move. The oil price reflects the economic value of oil less the cost of storing oil. As WTI requires physical delivery, and storage is hard (expensive) to find, the cost of storage in May exceeded the economic value of oil in May.
  • South Korean exports fell in the first twenty days of April, including exports to China. This reflects the global demand shock, which hits economies not in severe lockdown. News reports suggest North Korean Leader Kim is in a critical condition after surgery, which has given the dollar some support.
  • UK labor market data for February and March was released. The March claimant count numbers were modest (12.2k unemployment claimants, below the levels of most of 2019). This may reflect the success of the UK's furlough scheme. In Europe, the ZEW sentiment survey is due. Ignore it.
  • The Trump Twitter Feed has threatened an executive order temporarily suspending immigration. In the short term, there probably is not a lot of immigration happening. If this lasts too long, it would threaten US growth.

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