Crude oil falls to 17-year low as supply concerns linger

Global stocks lost momentum today as the latest government and fiscal stimulus measures failed to convince investors. In the United States, the Fed has lowered interest rates, increased its bond purchases by $700 billion and announced another $500 billion for overnight repo funding. Yesterday, the bank said that it would start a commercial paper funding facility to cushion companies. Meanwhile, Whitehouse and congressional negotiators are planning to launch a trillion dollars stimulus package. Other global central banks and governments have launched similar packages. Still, investors are unconvinced. In Europe, the DAX, FTSE, and CAC dropped by more than 4%, while in the US, futures were halted after they dropped by more than 5%. Meanwhile, government bond prices around the world dropped as investors dumped liquid assets.

The price of crude oil fell to a 17-year low as investors remained concerned about demand and supply as cases of coronavirus continued to increase internationally. Oil traders are concerned about increased oil production and low demand. Just today, data from Europe showed that car sales dropped by more than 7% in February. Most of the decline came from Germany, where registrations declined by 10%. Meanwhile, oil storage capacity is expected to max out in the next few months as Russia, Saudi Arabia, and other countries increase production. According to the Financial Times, if the current demand and supply dynamics remain, onshore storage tanks could be filled in the next six months. Later today, we will receive inventory data from the US.

The euro wobbled after the market received the February inflation data earlier today. Data from Eurostat showed that core CPI was unchanged at 0.4% in February. It was also unchanged at 1.4% on an annualized basis. The headline CPI rose from -1.0% in January to 0.2%. It rose by 1.2% on an annualized basis. Later today, we will receive the housing starts and building permits data from the US and the CPI data from Canada. 

EUR/USD

The EUR/USD pair reflected trader sentiment on what is happening around the world. The pair is trading at 1.1000, which is slightly above the day’s low of 1.0955 and high of 1.1045. The price is along the middle line of the Bollinger Bands on the hourly chart. The price is also slightly below the descending triangle that was forming a few days ago. The pair may see some more volatility as traders observe the happenings in the US and Europe.

XTI/USD

The XTI/USD pair declined to an intraday low of 25.70 as the sell-off in crude oil continued. The price is below all the moving averages on the daily chart while the average directional movement index (ADX) and Average True Range (ATR) have continued to rise. The pair will likely continue dropping unless the supply-side problem is solved.

XAU/USD

The battered XAU/USD pair struggled for direction as global risks continued to rise. The pair is trading at 1,500.00, which is above yesterday’s low of 1,451 and below today’s high of 1,554.55. The average true range, which is an important measure of volatility, rose on the four-hour chart. The price is slightly below the middle line of Bollinger Bands while the DeMarker is below the oversold level. The pair may continue seeing volatility during the American session.