Andrew Bezen

Financial Writer


Mixed sentiment in the oil market as the new trading year starts

There has been a massive chaos in the energy field in the last year. All the leading investors in the global world was in fear to see the sharp fall in the price of oil. The excessive supply in the production of oil is forcing the investors to lower down the price of oil in the global market. Due to variations of the demand and supply line in the financial market CFD trading was extremely difficult in the last year. Even the price of coking coal was suffering from bearish pressure in the global market. But things settled down to a great extent in the global economy after the Chinese government initiated 275 working day policy on the coal miners. Due to restriction in the production of coal, the price of coking coal surged higher in the global market. After that, the OPEC member decided that they should restrict the bearish movement in the gold price in order to bring stability in the energy field. But most of the OPEC leaders were overly cautious about their plan. Meanwhile, during that interval, the oil price suffered an extensive loss in the global market.

The temporary ground in oil price: In order to ease the energy crisis in the global world the OPEC leaders stated that they will cut the production of the oil in order to decrease the current supply of oil in the global market. They proposed that they will limit the production of oil to 1.2 million barrels per day. Such an optimistic statement from the OPEC leaders provided significant support to the oil traders and ultimately the Brent oil price finds a solid support near 27.05.Such a drastic action from the OPEC has not been since in the global economy since 2008 ad upon the release of this statement CFD trading community was relieved to a great extent. Though most of the leading oil producing countries appreciated the OPEC decision but they told that they need some time to limit the current production of oil. Russia told to the OPEC that they will definitely cap their current production rate and help the global energy sector to stabilize. Most of the professional oil traders are thinking that the oil price will start its bullish rally in the near term future since sooner or later OPEC will become hard to limit the current oil production rate to stabilize the energy sector.

Oil production continues in large scale despite the oil cap: In the last year the OPEC has already implemented oil cap in the global world and most of the leading oil producing countries have agreed to their statement. However, the number of oil rigs in the U.S economy is now 523 which was only 12 in the beginning of the year 2016.Most importantly Iraq has refused to participate in oil cap program and they have stated that they need much longer time to limit their current production since their economy greatly depends upon the production oil. Though the initial target for the 2.8 million barrels per day but currently Iraq is producing more than 6 million barrels per day. Due to this event, the CFD trading community is in great fear since if things continue  like these then the price of oil will drop sharply in the near term future. However, the Iraq government has told to the OPEC member that they will limit their current production of oil to a great extent to bring the stability in the nervy field. To be precise there has been a massive diversion between the leading oil producing countries in the world and the researchers are in doubt about the future of the oil price.

The sharp drop in U.S crude inventories: In last Wednesday the price of oil surged higher in the global market as the U.S crude stock data fell. According to the Global Benchmark, the Crude went up by 10 cents and traded at $55.57 a barrel. However, the current strength of the green bucks is extensively high and it washed away most of the gains in the market. The U.S Texas Intermediate crude futures also traded higher in the global market and traded at $52.42 barrel per day resulting in a 9 cents gain. All the leading investor’s sentiment was boosted after the sharp decline in the U.S crude stock and most of the leading economist are suggesting that the price of oil will go higher in the near term future since leading oil producing countries will follow the OPEC decision very firmly to bring the energy sector in stable condition. The U.S crude stock fell by 1.7 million barrel and this gave the oil price a major boost in the year 2017.On the other hand, the OPEC member Kuwait also proposed that they will also limit their production so that the excess supply problem mitigates in the global economy. Despite the ups and downs in the price of oil the overall sentiment still remains bullish for the oil market.

Summary: The oil price gained a solid bullish momentum in the global market after the OPEC imposed oil production cap in the year 2016.Professional oil investors are thinking that the price of oil will rally higher in the near term future since most of the leading oil producing countries will limit their current production of oil However due to Iraq and Libya investors are still in doubt about the effectiveness of this oil cap production in the global market.


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