Crude oil likely to hit $20/bbl, OPEC-Russia summit eyed: CLSA

Christopher Wood of CLSA says current crude oil rally is a countertrend move driven by hopes of a production freeze between Russia and Saudi Arabia and will fail, just as the rally in the second quarter of last year failed.

According to Greed & Fear, oil is much more likely to go to USD 20 a barrel than to recover to USD 60 a barrel. He feels still the rally may last a while longer given that Saudi needs to price its planned USD 5 billion international bond issue.

Wood says oil market will also remain hopeful ahead of the scheduled OPEC-Russia summit on April 17.

According to him, latest Fed statement on Wednesday adds little save for a reduction in tightening expectations in the ludicrous "dot plot" and yet another reduction in the Fed's GDP forecast. The "dot plot" shows two 25 bps Fed funds rate hikes to 0.75-1 percent are appropriate for this year, down from four rate hikes in December, he says.

Wood says financial markets are not yet reacting but the US presidential election is becoming ever more interesting, adding Donald Trump's win in Florida this week is historic, most particularly the way he pulverised a senator from that state Marco Rubio who, thankfully, has now withdrawn from the race given the insipid nature of his campaign.

True, the Republican convention in Cleveland in July could still be a contested event, he feels.