Bullish signals coming from refining sectors both in the US and China erased fears a possible slowdown of China’s economy and this helped crude oil prices to slightly go up and erased its earlier losses.
Crude oil powers the global economy. And it’s not just our personal cars, planes and other vehicles. It’s a valuable resource that is in high demand from over 7.6 billion people that require energy.
Here’s the picture:
Currently, the US is the world’s largest producer pumping a record of 12.6 million barrels per day, taking over Saudi Arabia and Russia for the first time since 1973.
Analysts however see a bearish trend scenario for this market lasting for the remaining days of the year and this is expected to last until 2020.
Oil prices have been relatively calm but has undergone immense pressure since the the September 14 attacks on the state-owned Saudi Aramco oil processing facilities in Abqaiq and Khurais which is located on the country’s eastern side.
During this time, almost half of the global oil supply was temporarily disrupted causing prices worldwide to soar by over 14 percent and hitting the $60 level a barrel.
The Saudis were able to resume production by the end of September causing prices to fall again at around $50 per barrel.
Previous data also showed that in mid-September, the daily historical volatility decreased dramatically from 75% to 23%.
Current factors affecting the oil market
The recent political events play a major role in the future of the commodities market particularly crude oil.
Tensions between the US and Iran and other countries in the Middle East is still a major factor on how crude oil prices are going to move in the immediate short term.
The ongoing economic trade war between the US and China is still not over and continues to have adverse effects on the global economy although recent news of progress on a deal between the two economic superpowers are easing fears of a possible global recession.
The latest breakthroughs in the Brexit saga is also on the table. The UK the and the EU announced a new Brexit deal with amendments in the provisions regarding border issues in Northern Ireland and the Republic of Ireland. Such developments signal a more acceptable deal which is good for the economy.
With the US presidential election happening next year, it is expected that the crude oil market will experience volatile price movements in the coming months.
Previous elections in the US have not influenced oil prices on a dramatic scale but market experts believe that the upcoming heavyweight slugfest will be an exception.
Why is it so?
First of all, the US currently holds the record of being the top producer of this precious commodity due to its expanding shale production and changes in regulations.
The US president is facing challenges from opposition Democrats as US House launched an official impeachment inquiry into Trump.
Additionally, the proposed legislation called the Green New Deal (GND) was conceived to deal with income inequality and climate change and this program could possibly change US oil output in the future.
With all of these taken into consideration, the future the energy markets in the US particularly the natural gas and crude oil sections will be greatly based on the outcome of the elections.
Should Trump remain in office, the current situation of the market will likely continue. Otherwise, a victory from an opponent that supports the progressive agenda could make a huge impact on the future of the energy markets not just in the US but on a global scale.
You can expect the prices of markets in the energy sector to experience huge volatility and the best approach is for you to take advantage of these trading opportunities.
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