Market Sentiment Hit by US Crude Oil Price Crash

Market sentiment analysis:

  • Trader confidence in the financial markets generally has been damaged by this week’s crash in US crude oil prices, which has prompted a move out of riskier assets like stocks and into safe havens – particularly the US Dollar.
  • However, the damage to risk sentiment has been less than might have been expected and moves outside the oil market have been small, suggesting that traders remain quite confident of a recovery from the losses caused by fears of the economic impact of the coronavirus pandemic.

Trader confidence holds up despite crude oil price crash

Trader confidence remains largely intact despite the crash in US crude oil prices that has prompted a move out of riskier assets like equities into safe havens such as the US Dollar. That suggests traders remain broadly optimistic that the coronavirus pandemic is close to its peak, that the global economic downturn will be less damaging than once seemed likely and that the outlook for risk asset prices is now reasonably positive.

What is Crude Oil? A Trader’s Guide to Oil

US Crude Oil Price Chart, Four-Hour Timeframe (April 1 – 21, 2020)

Chart by IG (You can click on it for a larger image)

Oil – US Crude

Data provided by

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily -3% 60% 9%
Weekly 10% 94% 25%

In this webinar, I explained how the markets for crude oil work, why some prices dived into negative territory this week and why the consequent moves in other financial markets were relatively small – suggesting that sentiment overall is less depressed than earlier in the year.

I looked at the trends in the major currency, commodity and stock markets, at the IG Client Sentiment page on the DailyFX website, and at the IG Client Sentiment reports that accompany it. You might also like to check out the DailyFX Trading Global Markets Decoded podcasts.

— Written by Martin Essex, Analyst and Editor

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