Over the past few years we have seen an almost catastrophic fall in the price of Oil from over $100 to under $30 a barrel, and while this has been a great reprieve from high fuel prices and motor costs for the public, not to mention an opportunity for any spread betting sites to make a huge profit, it has unsettled the commodities market and global economy.
As of today, Brent Crude is sitting around $44 while WTI Crude is trading at $41.50, a worrying fall from its highs of 2014, but certainly a huge gain from its devastating lows in February. But for those who are looking to make an investment in the commodity, has it reached an end of its volatile period or are there to be more troubles on the table?
Well the answer is seemingly the latter. Despite OPEC gaining control of several countries supply to the market and the fact that the US has shelved several investment plans into the market while scaling back its Shale output, the price is only relative to the supply/demand ratios that the market sets – and as of right now – there is a huge oversupply of oil in the market and countries like Saudi Arabia and Iran are not content with the idea of slowing their production lines.
The future price of Oil still looks set to recover to over the $50 mark, but with the FED potentially suspending another US rate rise and with an unknown supply of Oil already held in reserves, the risk of another short-term fall back in price cannot be ruled out … although we don’t expect to see any more sub-$30 prices anytime soon thanks to the intervention of OPEC and agreements between several of the major oil producing countries.
But back to the question at hand – where and how should you invest. Well taking today as an opportune example, the Saudi minister in charge of production has just stated that he does not support a cut in production which will of course impact the price in a negative manner as the oversupply will continue.
This would have been a great opportunity for any spread bettors and traders to have placed a quick intra-day bet on the price going down. In terms of longer-term bets, the price recovery looks certain to happen as we mentioned above, but this may take some time. Long-term investments in the commodity are bound to pay dividends if it gets back to the $60-$70 mark, but be warned this will not be a quick win.
Article Submitted By Community Writer