Oil prices slowly sinking as investors watch for the next year opening
11 months ago forexsimulation 0
There has been a massive chaos in the energy sector from the very beginning of this year as the supply of oil was extreme in the global market compared to its demand. The price of oil kept on falling and the investors were deeply worried about the ongoing crisis in the energy field. However, things changed dramatically in the global market as OPEC declared their oil cut plan in their last meeting and many option traders made a decent profit in options trading on the event of this major announcement. Such a drastic event has not yet been seen for a long period of time from the OPEC. Upon the release of the oil cut decision in the global market, the price of oil found a solid ground and started to show bullish momentum in the market. This event has also created extreme volatility in Forex market, especially in the USDCAD pair. Canada is one of the largest oil producing countries in the world and upon the release of such optimistic statement from the OPEC member, the USDCAD pair pushed lower in the global economy.
Most of the leading oil producing countries in the world have agreed to the oil cap and they have stated that they will participate in the program from the very beginning of the next year. Currently, the trading volume is extremely thin in the global market and traders are thinking that the market has nothing to offer to the traders as most of the professional investors are currently staying on the sideline enjoying the Christmas holiday session. However, despite the Christmas holiday session the price of started to lose its bullish momentum in the market. The main concern of the traders is now about the implementation of the plan. Cutting the oil production to significant level will be extremely difficult in the month of January and traders are thinking that the price of oil might show a sharp bearish movement in the near future before the bulls take control of the market.
The forex market exhibiting an extreme level of low volatility in the market and traders are thinking that the market will continue in low volume trading mode until the end of this year. Since most of the traders are currently enjoying the Christmas holiday the market is suffering from low liquidity at the current moment professional traders are more active in options trading rather than forex. In the last Friday, the price of Bren oil according to February contract went by 0.2% in the global market and settles at $55.16 a barrel. Currently, the leading oil investors are thinking that the price of oil might test the 17 months high in the global market and most of the professional traders are looking to buy the oil in the deep with bullish price action confirmation signal. The crude also went up in the global market and traded 7 cents up at $54.51 in the global market.
To be precise the market showed decent bullish momentum in the market in the last week. But things went pretty bad after the U.S crude stock inventory data came out in the global market and traders found that the current supply of the U.S crude is 3.5 million whereas the forecasted data was only 3.2 million barrels per day. The researcher found out that the number of oil Rig Company in the U.S has greatly increased over the last 1 year. Initially there were only 12 operational oil rigs but things changed to a great extent at the end of the year since 500 new oils rigs have been added in the U.S. This is a clear indication that the U.S government is not yet ready to cut the oil production from the very beginning of the next year and this has brought the first set oil bears in the market. However, the U.S government has stated out that they will make sure they are limiting the production of oil from the very beginning of the next year and professional oil investors need to see data to believe this statement from the U.S government.
The biggest threat to the oil industry is known Iraq and no country is now able to control their oil production due to the massive troop’s pullout from Iraq. Currently, Iraq was supposed to produce less than 3 million barrel per day but data release shows that they are producing near about 6 million barrels per day. Iraq also refused to limit the oil production from the beginning of the next year and they told that maintaining the current oil production rate is extremely crucial since their economy is greatly depending upon it. In the forex market, the USDCAD pair is also showing extreme bullish momentum in the market due to the recent bearish move in the oil price and many option experts have executed their call option trade in options trading to make a decent profit.
Some reliable sources are telling that by the end of the year 2016 the U.S government will have more than 523 rigs in their economy for increasing the production of oil. In the eyes of trained professional, the current situation of the oil industry is totally unstable and most of the leading traders are still waiting to see what the next year’s offers to the oil traders. Though the market sentiment is currently bullish but the fundamental section is pushing the price of oil price significantly lower in the global market. However, if all the leading oil producing countries in the world limit their oil production by 1.8 million barrels per day we will see a solid rally in the oil price/On the contrary, if the supply of oil increase with such an alarming rate then we will a sharp drop in the price of oil.