Tags: oil | crude | dollar | Morgan Stanley

Morgan Stanley Sees $20 a Barrel Oil on US Dollar Appreciation

Morgan Stanley Sees $20 a Barrel Oil on US Dollar Appreciation
(Dollar Photo Club)

Monday, 11 January 2016 10:53 AM

A rapid appreciation of the U.S. dollar may send Brent oil as low as $20 a barrel, according to Morgan Stanley.

Oil is particularly leveraged to the dollar and may fall between 10 to 25 percent if the currency gains 5 percent, Morgan Stanley analysts including Adam Longson said in a research note dated Jan. 11. A global glut may have pushed oil prices under $60 a barrel, but the difference between $35 and $55 is primarily the U.S. dollar, according to the report.

“Given the continued U.S. dollar appreciation, $20-$25 oil price scenarios are possible simply due to currency,” the analysts wrote in the report. “The U.S. dollar and non- fundamental factors continue to drive oil prices.”

Crude tumbled last week on volatility in Chinese markets after the country sought to quell losses in equities and stabilize its currency. A 3.2 percent increase in the U.S. dollar — as implied by a possible 15 percent yuan devaluation — may drive oil down 6 to 15 percent, which could put crude in the high $20s, Morgan Stanley said. If other currencies move as well, the shift by both the dollar and oil could be even greater, according to the report.

Brent crude closed at $33.55 a barrel on the London-based ICE Futures Europe exchange on Friday, the lowest settlement since June 2004. Prices extended their declines Monday, losing 2.7 percent to $32.64 at 8:10 a.m. in London.


© Copyright 2021 Bloomberg News. All rights reserved.


StreetTalk
A rapid appreciation of the U.S. dollar may send Brent oil as low as $20 a barrel, according to Morgan Stanley.Oil is particularly leveraged to the dollar and may fall between 10 to 25 percent if the currency gains 5 percent, Morgan Stanley analysts including Adam Longson...
oil, crude, dollar, Morgan Stanley
235
2016-53-11
Monday, 11 January 2016 10:53 AM
Newsmax Media, Inc.
 
Newsmax TV Live
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved