The OPEC + and G20 meetings are accompanied by enormous uncertainty. Deutsche Bank economists are trying to quantify the value of the best scenario for petroleum currencies, CAD and NOK.
“Gross betas imply that a 30% increase in oil prices, driven entirely by supply reductions, would be worth about 3% and 2% respectively for NOK and CAD, plus some of any improvement in sentiment of global risk. ”
“The good news for oil currencies is that about half of the drop in oil prices this year may be due to a supply shock which is still largely in price, so that a successful deal on Overall supply cuts in the coming days promise a recovery in oil prices. ”
“The bad news is that it is probably the shock to global demand for oil that accounts for most of the decline in both CAD and NOK this year. Unless the global economy rebounds or until the economy recovers, even the best of times for the OPEC + and G20 meetings will provide only limited relief.