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Oil may be the cleanest way to trade covid fears, but beware of OPEC

OPEC + meeting is Thursday

Joe Biden can get the lower gas prices he wanted after all, but not for the reason he hoped.

There was a sudden shift in market sentiment today over concerns over the new variant of covid in South Africa. I wrote about 5 things people worry about and it isn’t a pretty picture. At the same time, it’s very, very early.

Some talk around covid concerns has turned out to be, but a fairly consistent one is that covid fears are holding back gasoline demand. Oil is down $ 1.79 to $ 76.51 now, erasing the post-SPR “buy the fact” rally.

Oil has stumbled lately and that won’t help. The caveat is that OPEC + might be looking for a reason not to pump the planned extra 400,000 bpd and now they might have it.

On the currency side, the CAD is following the WTI closely and with Canada opening up to lockdowns, this is another interesting way to look at trade.

Again, I think it’s too early for anyone to draw any conclusions about this variant, but by the time it becomes clear that the market will have already moved.

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