Today the oil market finds itself under great pressure again. It was only a week ago that the May futures of the WTI brand crashed to -37 USD per barrel, and now it seems the June futures are beginning to seriously weaken as well.
Investors are spooked that the lack of sufficient storage for all of the extra barrels of oil (not delivered due to the recent heavy drop in demand) will continue to be an issue. Thus, the WTI for June delivery dropped 20% to trade around $11.52. The Brent crude remains a bit more stable, yet still far below its pre-pandemic levels, at $23.48 per barrel.
Meanwhile, stock markets are experiencing somewhat of a recovery. Investors are increasingly confident that the markets will recover as many countries begin to ease out of the Covid-19 lockdowns. Germany, Italy, and Spain have already spoken about reopening their economies and have taken small steps towards that goal. In the US, several states have announced the upcoming dates for ending the lockdowns.
Due to improved sentiment on the markets, today there is less demand for safety assets and a more pronounced risk appetite. Thus, safe assets like the US dollar and the Japanese yen are relaxing against other currencies.
Note that commodity currencies, which usually react well to higher risk appetite, are still under pressure because of the oversupply of oil on the market. Thus, the Canadian and Australian dollars, as well as the Norwegian krone, remain volatile and weaker than usual.
Today the Federal Reserve is beginning a two-day policy meeting, though new stimulus plans and rate adjustments are not expected at present.
