Norway: Oil headwind is less pronounced than suggested – Danske Bank

The NOK was remarkably stable despite the WTI sell-off, highlighting two important points, in the opinion of strategists at Danske Bank.

Key quotes

“Brent crude is the relevant benchmark for the NOK and with a more subdued drop in Brent, the Brent-WTI spread reached record highs.”

“The faster the global economy reopens, the faster physical oil demand will return and the more positive it will be for Norway’s terms of trade and hence the NOK.”

“Oil remains a headwind for NOK near-term via the terms of the trade but when digging into the details the headwind is less pronounced than what headlines would suggest. With Norges Bank still buying NOK2bn per day we keep a cautiously positive view on NOK.”