20.04.2020: Oil under pressure; Brent about to slide below $27 (Brent, USD/RUB)

Global oil prices started the week with losses. West Texas Intermediate crude is losing more than 20% of its value. The American oil is plunging on oversupply worries and fears that US storage facilities at Cushing will soon be filled. The ruble is struggling to hold at the level of 74 against the US dollar.
In the morning trade, Brent crude approached the support level of 27 US dollars per barrel. This is how the markets have reacted to the oversupply. The oil storage facilities will soon be full due to the excess supply and slumping oil demand amid coronavirus restrictions. The situation in the US oil industry is quite challenging right now. So, the spread between Brent and WTI has already widened to 10 US dollars.
Today, the American crude is trading at less than 15 US dollars per barrel. At one point, the contract fell by as much as 21%, its lowest settlement since March 1999.
International Brent oil futures settled at 27 US dollars 40 cents per barrel in the early session. If the price breaks through the 27 mark, its next target may become 25 dollars a barrel.
It seems that the new OPEC+ deal failed to provide any significant support to the oil prices. It just stops the quotes from sliding deeper. Investors are still focused on the huge drop in oil demand. The situation may only improve if the main importers, including the US, lift the travel restrictions and end the lockdown imposed to combat the coronavirus spread. US President Donald Trump announced on Saturday that some businesses in Texas and Vermont could be reopened on Monday while still observing precautions.
The risk appetite is still low, so a quick rebound in oil prices is highly unlikely. This week, traders will take a close look at the industry data from the American Petroleum Institute and the US Energy Department. If another increase in crude inventories is reported, this will put additional pressure on the oil market.
Slumping oil prices are dragging the ruble down. In the course of the session, the ruble is at risk of passing the important level of 75 against the US dollar as the current background is quite negative. Meanwhile, on Monday, the ruble managed to advance to the level of 74.40.
This week, the Russian currency has two formal supporting factors. The first one is the upcoming peak of tax payments in April while the second one is the policy meeting of the Central Bank of Russia. Investors expect the regulator to cut the key interest rate by 25 basis points. This, however, may not be enough to support the weak ruble.
The Russian currency remains sensitive to the global situation around the coronavirus outbreak. The virus is spreading rapidly and the quarantine measures are being extended. This situation continues to weigh on the energy markets.
In case the fundamental factors improve, the Russian currency has a big chance of returning to the range of 73 and 74 against the US dollar.
In general, the outlook for the ruble is quite pessimistic due to the looming downturn of the Russian economy. The dollar/ruble pair is likely to return to the mark of 80 in the short term.

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