Oil price are looking to break resistance at $55.03 making 2017 new highs. The decline oil stocks and solid growth in demand has overcome weather and geopolitical issues. Brent is now trading above $60brl and futures backwardation has invited deeper buying in the long end of the curve. OPEC has sighted their success in supply restrain pointing to falling inventories. It seems that WTI is likely to maintain at $55.
However, commodity-linked currencies have not followed oil prices higher. CAD and NOK have diverged significantly from oil prices in recent weeks. It is not uncommon for decoupling but the divergence rarely lasts for an extended period. The rationale is the convergence of higher oil at the same time US rates have risen, which reduced the sensitivity to external influence. With US yields stabilising we would watch for CAD and NOK to catch up to higher oil.