Daily market commentary: The oil price was hit


The pound is staging a comeback during early Tuesday trading, recovering the previous session’s losses to the euro and the dollar. Despite the disruption caused by the new COVID strain and the lack of agreement with the EU, with little more than a week before the end of the Brexit transition period, sterling is showing a resilience that points at investors’ ‘faith’ in a trade deal between the UK and the EU. The current value of the British currency reflects, despite the woes the country currently faces, an optimistic market stance as to the future relationship with the European Union, with a no-deal scenario clearly priced out.

Ricardo Evangelista – Senior Analyst, ActivTrades

daily market analysis


The oil price was hit by the risk off seen on markets in the last 36 hours. Growing fears about the new UK variant of the coronavirus, generated a sell off on both European stocks and oil.

For WTI we have a quite significant support zone between $46.50 and $47 per barrel, which triggered a quick rebound yesterday afternoon, before being tested again this morning. So far, yesterday’s low hasn’t been challenged and this could be seen as a signal of the price attempting to stabilize, even if oil is still in red again this morning.

The next few trading sessions will be crucial in understanding if the bullish trend of the last six weeks is just taking a break or if the recent declines are the start of a major pause. For the time being, despite the 5% decline from the peak of last week, we are still in a long-term positive scenario. However, this could change if investors continue to worsen their outlook on oil demand for 2021 due to Covid.

Carlo Alberto De Casa – Chief analyst, ActivTrades 


European shares opened with a firmly bullish tone on Tuesday after investors welcomed the validation of the US spending bill as well as progress on the Brexit talks. Yesterday’s dent to market sentiment that was brought by worries of a new virus strain over the weekend are now being offset, on a very short-term basis at least. Even if the US relief package was already widely priced-in, most investors were finally happy to see it validated. In addition, most traders also welcomed the fact Boris Johnson made another proposal to the EU in an attempt to secure a last-minute deal, confirming his will to ensure the economic future of both regions. We have now entered the two last weeks of the year and there is a high chance that positive news will keep on being exacerbated by investors, as they will try to push stock prices higher before the curtain falls on 2020. Investors will keep a close eye on today’s US GDP release prior to tomorrow’s jobless claims data for November which could bring increased market volatility right before Christmas.

Pierre Veyret– Technical analyst, ActivTrades

Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

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