Having fallen to USD 1.14 last night, GBP has bounced off that level and against all currencies including EUR it is stronger this morning. It has been a very long week and it is not over yet(!). Just to remind you, GBP started the week on Sunday night in the Far East at USD1.24.
With WTI now at $25.62 and the Saudis and the Russians engaged in their high stakes game of poker with oil supplies and prices, the world’s capacity to store oil is being severely tested given the slow down in demand due to the economic impact of Covid19. As land based storage facilities are filling up, traders are looking to water based storage ie using oil tankers as storage rather than transport. Last week Glencore rented 1 of only 2 ULCC or Ultra Large Crude Carriers which can take 3 million barrels. Tanker rates are soaring for super tankers: a 6 month contract is now $85K per day or $15.3 million, while a 3 month contract is $150K per day or $13.5 million. Ship owners are enjoying the ride while OPEC members are nervously hoping that Russia and Saudi Arabia patch things up soon…..
For those of you who are wondering about the price history, I have gone back to the end of WW2 and yes that was 1 of the 3 times that WTI has been at this price level. The others being 1973 and 1999. At the other end of the scale, the high in the past 75 years was in June 2008 when it was $165.
The two largest companies Lime and Bird started by suspending their services in 11 states in the USA and have now suspended their services in many European cities with the restrictions in place on people movement. With e scooters already an increasing feature of many cities, many are hoping that there is some clear legislation regarding their usage and in particular which part of the road they should stick to.
The last time that I can recollect people in this country stocking up or less charitably hoarding supplies of staple goods was much earlier in my foreign exchange career when I was trading Swiss Francs (CHF). On 24-04-80 President Jimmy Carter gave the go-ahead to invade Iran for the purpose of rescuing the 44 American hostages that Ayatollah Khomeini had detained. Operation Eagle Claw was launched and included the USS Nimitz the high tech symbol of the USA’s fearsome nuclear power as well as 8 helicopters. As is well known the mission was a conspicuous failure as only 5 helicopters made it to the landing zone. Upon the advice of his generals, Carter then aborted the mission which prompted the Ayatollah to declare it an act of God or as he put it “Angels of God” which had intervened to protect Iran, him and his theocratic government from the Great Satan.
Meanwhile back on the trading desk, all hell was breaking out and suddenly the CHF was the most wanted currency in the world and I was in the hot seat. The spectacle of the mighty USA humbled in this way prompted a run on bottled water, baked beans, candles, torches and batteries. Epilogue: Some of my then colleagues who “went long” baked beans were feeding them to their luckless children for the next 2 or 3 years.
Amazingly this publication still exists today with a website and also is popular……despite or maybe because of their 1949 prediction: Computers in the future may weigh no more than 1.5 tons. SGM-FX’s IT guru, Michael shook his head sadly as he headed off home with his ultra light PC weighing just 1.35 kg. “Just tragic” he muttered.
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Overrated Rates
Charles Porter
Tue 1 Oct 2024
Overrated Rates The unwinding of USD implied short term interest rates shouldn’t be underestimated. Take a brief look at changes in FX swap pricing over the past few months and you’ll see just how significant those interest rate expectations have proved to be. Particularly within GBPUSD, the difference is enormous. Post-pandemic inflationary pressures affected the […]
Daily Brief – From minutes to CPI
Charles Porter
Thu 10 Oct 2024
From minutes to CPI If you are finding it harder than usual to digest the current financial climate then you are forgiven entirely. Almost intraday, sentiment is flipping between adjectives such as inflationary, deflationary, stagflationary, expansionary and contractionary to describe the same economic phenomena. That is largely being driven by a rapidly changing macro environment […]
Daily Brief – Nonstop flight to nowhere
Charles Porter
Tue 8 Oct 2024
Nonstop flight to nowhere And before you start wondering, no, this brief isn’t about some new route Qantas has launched to propel passengers an inconceivably long distance in one hit. What I refer to in the title of this briefing are the rapidly evolving growth and economic base case projections within the US. The debate […]
