The big story in the markets is the jump in oil prices after Saudi oil rigs were attacked by gut drones over the weekend. The attack destroyed about half of the kingdom’s production and this was reflected in a north-facing oil rocket.
Profits were limited and the price was kept at Brent below $ 70 a barrel, but this was still close to 10% up from Friday’s closing price. This supports the Canadian at the start of the session today.
At the same time, the yen and franc also benefited from news of a new escalation in geopolitical tensions that diverted cash flows to safe haven assets, with gold back over $ 1,500.
The pound has been the clear loser since the start of the week amid a spectacular end on Friday, trading back over $ 1.20. The latest Brexit news is that Boris Johnson is rejecting the possibility of postponing Brexit, and he will surely say this to European Commission President Junckler today.
Looking ahead, I would expect the Saudi news to continue to develop through the markets and this should keep the mood of the softer side for the time being. If anything, I would be watching for any changes in the stock so that I could feel any change in the current market sentiment.
But I would expect oil prices to be maintained in the short term, but “change” today should not worsen the overall outlook too much. I mean that Saudi infrastructure and facilities are affected and will take time to recover, but they have more than enough spare capacity / reserves to limit the loss of market share so far.
Trader Aleksandar Kumanov