G20: what did the leaders decide?
The G20 summit took place in Bali, Indonesia, on November 2022…
Oil: sliding down
Information is not investment advice
Still bright?
“2020 looks like it has upside potential that will also defy some of the gloomy predictions” – these were the words of the OPEC Secretary-General Mohamed Barkindo in November. He added that time that he saw brighter spots in the nearest future for the cartel.
A month later, during the OPEC meeting on December 5, it was decided to cut the output by 500,000 bpd for the first quarter of 2020. The general impression of that meeting provided little optimism on behalf of the OPEC to the journalists. In fact, there were hardly any official comments at all.
Now, OPEC and its strategic ally Russia are considering to hold an emergency meeting to address the weak oil demand from China resulting from Coronavirus counter-measures. The original time when the cartel was planning to gather for discussion was March, then the date was moved forward to February 14. Eventually, it may be set even earlier as observers report.
Oil into the fire
To put things in context, here are some additional facts. As of February 2020, Libya has cut its oil output by approximately 80%. The price should have increased because of that, but didn’t, eventually. At the same time, the oil production has reached its new records both in Russian and USA – which means there will be more tension between the US and OPEC+ as both gain more weight but have almost opposing interests.
What does the chart say?
It says things don’t look good for the oil price. Or they do – depends on who is seeing this. For OPEC obviously it’s bad: the cartel’s member countries are oil-dependent, and the oil price heavily contributes to the county income. The lower the price is – the lower the county income is. Entire political structures and domestic economies may tremble because of this alone, and it happened already.
The oil price broke the level of $57 recently (for Brent) – the level that has been the support for its movement through 2019. The three-years support of $50 is not that far away – meaning it’s almost where it was before the US-China trade war. Sounds quite alarming; and it should – at least, for the countries which have oil as the main state profit contributor.
Conclusion
We are far from seeing stability in oil prices, so you can use it and make profit on that. In addition, trading oil is a good diversification and additional to currencies.
Similar
The End of Era: What Might the UK Face Next?
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
Why didn't oil prices calm despite OPEC+ attempts?
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
Popular
What Will Happen with the Euro? An Economic Perspective.
eurusd-is-falling-what-to-expect-from-the-future-price-movement
Will Australia's "Rampant Inflation" Prevail in May?
Greetings, fellow forex traders! Exciting news for those with an eye on the Australian market - the upcoming interest rate decision could be good news for Aussies looking to refinance or take out new loans. The Mortgage and Finance Association Australia CEO, Anja Pannek, has...
How Will BoJ Meeting Affect the Yen
Hold onto your hats, folks! The Japanese yen took a nosedive after the Bank of Japan (BOJ) left its ultra-loose policy settings unchanged, including its closely watched yield curve control (YCC) policy. But wait, there's more! The BOJ also removed its forward guidance, which had previously pledged to keep interest rates at current or lower levels. So, what's the scoop? Market expectations had been subdued going into the meeting, but some were still hoping for tweaks to the forward guidance to prepare for an eventual exit from the bank's massive stimulus
Choose your payment system
