Oil Forecast to Fall, Dragging Canadian Dollar (currency : CAD) & Norwegian Krone (currency : NOK) With It

March 2, 2016 - Written by John Cameron

STORY LINK Oil Forecast to Fall, Dragging Canadian Dollar (currency : CAD) & Norwegian Krone (currency : NOK) With It

Oil Prices Predicted to Dive after US Inventories Eclipse Estimates

Official data from the Energy Information Administration (EIA), published yesterday afternoon, is forecast to radically altered the landscape of the global currency markets into the medium term. The EIA figures revealed that US oil stocks had grown for the third week on the trot and that this week’s increase was on a monumental scale; American inventories of ‘Black Gold’ had jumped by a whopping 10.4 m barrels to touch a fresh record high of some 518 m barrels.

The upsurge in US oil stocks was markedly higher than the 3.6 m barrel jump which analysts had forecast. The news caused a sharp and immediate downward spike in the price of a barrel of Brent Crude, which had been trading at close to the $37 threshold during Europe’s morning session.

During the final stages of yesterday’s European equities session, the benchmark oil price had fallen to close to the $36 level and analysts anticipate that, given the tone of today’s statistics, there may be further downside to come for the key commodity, although Brent continues to hold just below the $37 per barrel mark.

Oil Glut Forecast to Impact NOK and CAD Exchange Rates

The news from the States made the potential for a global ‘oil glut’ which many experts have been predicting during recent months all the more real and the Canadian Dollar (currency : CAD) and Norwegian Krone (currency : NOK).

However, FX insiders forecast that the oversupply of oil Stateside could effect a raft of other risk-correlated currencies besides.

With global equities markets taking a lead from commodities markets, and in particular oil prices, during recent months, the predicted fall in oil is considered likely to translate into a fall in worldwide share markets. If such a move does occur, then look for the risk-sensitive Australian Dollar (currency : AUD), New Zealand Dollar (currency : NZD) and South African Rand (currency : ZAR) to suffer against the Pound Sterling (currency : GBP).

The one saviour for oil, risk-driven currencies and global equities markets alike could prove to be the deal proposed by Saudi Arabia and Russia to maintain oil output at January levels.

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