WTI bulls in charge on expectations of Biden victory, eyes on CAD
- WTI bulls in charge as US elections are in focus.
- A Biden victory is expected to prop up demand hopes.
- CAD to benefit from a Biden victory and supported by OPEC hopes.
WTI is trading at $37.72 between a range of $36.55 and $38.29 and up some 1.67% at the time of writing in anticipation of a Biden victory in the US elections today.
WTI had otherwise been on the back foot over the course of late October, pressured by the energy market's supply-driven news and sweeping coronavirus lockdowns.
Analysts at TD securities explained that while deteriorating demand expectations have also contributed to the decline, the OPEC+ nations' reactive approach and the resurgence in Libyan supply have been the drivers behind the selloff.
''In this context, reports that Energy Minster Novak discussed a delay in the planned tapering with Russian energy companies was sufficient to see prices reverse and close deeply in the green — despite the lockdowns. This lends strength to our view that OPEC+ may hold the right key to support markets.''
Meanwhile, for the immediate future, the US elections are going to be the key focus of both financial and commodities markets.
WTI/CAD correlations
The compelling argument for higher CAD could otherwise see the current hamstrung on lower oil prices if sentiment for global demand were to fall heavily should the coronavirus does not abate sooner than later.
The Bank of Canada meeting last week was characterized by a dovish tone and it pledged to keep rates lower for longer.
So, Friday's jobs data out of Canada will be important.
If it indicates that the jobs sector remains on a recovery path despite a worsening Covid-19 situation, then lower oil prices may not have so much impact given the lower probability that the BoC will act again in the foreseeable future.
The CAD, on the other hand, can soar of the US dollar buckles under a Biden presidency and hopes of OPEC+ keeping a lid on global supply.
WTI levels