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Currency Market Analysis

Apr 21, 2020 | Currency Market Analysis

Global Themes

Sing hit as oil plunges below zero in historic move

Oil prices plunged below zero for the first time ever overnight as a looming contract delivery sparked fear across markets.

The massive fall in demand, sparked by reduced economic activity to contain COVID-19, along with increases supply due to a dispute between Russia and Saudi Arabia, produced the conditions.

Importantly, the move in oil was most pronounced in the “front month” contract with oil for delivery in May collapsing.

With storage facilities in the US near capacity, traders were forced to “pay” to have oil contract taken off their hands.

After falling from US$20 to US$10 per barrel in yesterday’s trade, the May crude contract fell as low US$-40.32 before closing at US$-13.10. The contract stops trading tonight.

Other contracts were lower, with June delivery contracts trading just above US$21 per barrel.

SGD pressured

The SGD was pressured by the turmoil in the commodity markets.

The USDSGD climbed from one-week lows.

The EURSGD climbed from eight-week lows while the JPSGD neared two-week highs.

RBA in focus

Regional markets will be looking to the Reserve Bank of Australia today.

RBA governor Phillip Lowe makes a major speech titled “Economic and Financial Update”.

Later tonight, the all important German ZEW business confidence index is due while US real estate numbers will also be closely watched.

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