Oil N' Gold Focus: Oil Trades With A Soft Tone, Decouples With Stocks' Rally

Oil Trades With A Soft Tone, Decouples With Stocks' Rally

Oil price continues to trade with a soft tone below $45/bbl in European morning as investors were disappointed by the OEPC's decision given further deterioration in oil demand. However, many analysts were happy as rise in oil price will have negative impact on economy recovery.

According to Francisco Blanch, commodity analyst at Merrill Lynch, OPEC should focus on strict adherence to production quota before announced further reduction. Moreover, spike in oil price is not good for global economy.

OPEC's decision did not change our view that oil price has been stabilizing. Both WTI and Brent crude forwards have shown strengthening in timespreads, indicating OPEC's previous cuts have tightened oil market. Oil price has traded with great volatility since 2H08 and dived by more than 70%. However, the collapse appeared to have ended at 32/33 in Jan 09 and price has been staying roughly above 40 over the past few weeks.