Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Cold Sentiment Prevails Among Oil Investors Ahead Of OPEC Meeting

Published 25/05/2017, 06:29 pm
Updated 09/07/2023, 08:32 pm

The energy field has been stabilized to a great extent after OPEC put a cap on the oil production in the global economy. Prior to implementation of the oil cap, the price of oil was falling hard in the global marker as most of the leading oil producing countries were producing excess oil in the global market. The oversupply problem was so intense that without a drastic action from OPEC it would have been really hard to control the falling price in the oil industry. Such a drastic action from OPEC was not seen since 2008 but the leading oil producing countries well appreciated OPEC decision to bring stability in the energy field. With the reinforcement of oil falling price, the USDCAD pair in the forex trading industry exhibited a decent drop in the global market.

Low volatility in oil market: The oil market has ceased its volatility to a certain extent in the global market prior to the OPEC meeting as most of the investors are expecting an extension of the oil cap production program. However, the professional Aussie traders are still making a decent profit in the low volatile market. If things happen as expected then we might see another strong bullish rally in the in the oil market in near future. The US crude went up by 3 cents in the global market and traded at $51.50 and the Brent was up by 0.09 percent and traded at $54.20.If the extension deal for another nine months gets sanctioned by OPEC then both OPEC and non-OPEC members have to cut oil production by 1.8 million barrels away in the global market. If the OPEC manages to cut the production rate as they calculated then we will see a strong foundation in the oil industry which will push the price of oil high in the market. With a rise in the price of oil, the USD/CAD pair will be under extensive bearish pressure in the forex trading industry in the upcoming days.

Rising number of active rigs in US: The number of active oil rigs in the US economy is increasing at an alarming rate and this has created a strong fear into the mind of oil investors. Even in the beginning of the year 2016, the number of active oil rigs was only 12 but by now it 712 which has extensively high for the US economy. If all the oil rigs become functional then the oversupply problem in the oil industry will again surge in the global market which will ultimately push the oil price lower in the forex trading industry. However, the US government has already stated that they will not produce excessive oil and cause catastrophic disaster in the energy field. According to the American Petroleum Institute report, there has been a decent fall of 1.5 million barrel in the U.S crude stock in the past week. This data has eased the mind of some of the leading oil producing countries prior to the OPEC meeting. However, OPEC has already stated that they will not tolerate an excess supply of oil if the extended their current limit in the production cap of oil.

Summary: This week is going to play a major role for the professional traders around the globe as lots of high impact major decisions will be taken in this upcoming week. The FED is going to declare their statement regarding the pending interest rate hike decision and an imminent rate hike will push the US dollar index higher in the global market. On the contrary, the OPEC is most likely to extend their recent oil cap production for another nine months and an implementation of this oil cap policy will bring strong bullish rally in the oil industry.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.