Oil. Global outlook. Trading idea.
Local military conflicts that occur near oil pipelines or in oil-producing countries, of course, cannot be discounted, as they have a direct impact on the prices of oil. The correlation of the price movement with military actions is visible to the unaided eye and is obvious, but this part of the price component of the barrel of oil remains behind the brackets.
For today there are economic reasons pushing oil prices to new yearly highs. One should also not discount the increased attention of stock market speculators to the statements made by OPEC. Several years ago, the decisions that were made by the organization were simply ignored by market participants. The faith of market players in the ability to somehow regulate the quotas for production from OPEC aspired to zero. Now, the situation has changed dramatically. With the price moving below $ 50, verbal intervention from the organization of oil exporters were enough for buying to commence.
The volume of oil supply from the OPEC countries is steadily declining, which indicates a strict implementation of the plan to reduce production.
Because of the low prices, investments in exploration and development of new sources have been falling for the past several years, yet demand continues to increase, including from China’s side. The oil refining capacity of the PRC continues to increase and, perhaps, China will soon be in first place ahead of the US.
The resource of operating fields continues to decline, and investment in new fields takes time to compensate for declining production. This situation is actively used by exchange speculators to build up positions on black gold.
To prevent the development of this scenario, the US dollar is capable, or, more precisely, the growth of the US dollar index. Assuming that for some reason the Fed in the medium term will significantly accelerate the reduction of its balance sheet, and at the same time it will aggressively raise the base interest rate, the dollar index will significantly strengthen, thereby oil in terms of US dollars, other things being equal, will begin to become cheaper.
Today, it is more reasonable to move up the trend, gaining a position on the kickbacks, with subsequent fixation of profits at 5-7 percent, and in the medium term, probably, the conquest of a three-year high. We wish you profitable trading!
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