The Academy of Financial Trading

Crude Oil – The Hidden Truth

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Crude Oil explained

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Risk Warning

WTI (West Texas Intermediate) Crude Oil – at its lowest in 4 years

WTI Crude Oil – priced in US Dollars – is at its lowest point in over 4 years

Crude Oil explained

Crude Oil

Although typically a volatile market recently we have witnessed a sustained bearish downtrend.

There have been many varying opinions as to why this has occurred

Let’s gather the hard facts and attempt to draw some conclusions

Crude Oil

Supple & Demand – the driving forces of oil prices?

Crude Oil has typically been driven by supply and demand in the past.

Supply and demand are typically the driving forces constantly at play behind all market movements but for Crude Oil this is more black and white than usual – let’s take a look at the supply figures of late.

If one were following supply and demand dynamics only we might note that only since the beginning of this year (2015) have we begun to notice over supplies to which we could attribute the fall in price

Crude Oil explained

According to the International energy Agency the global demand has actually steadily increased, and at that was strong during beginning of the price decline still amid regular supply

Other Forces – Geo-politicalThe US as an economy has gradually reduced its oil imports over the years since 2005 – this essentially means it is gradually becoming more self sufficient and hence powerful and more independent

Due to background factors in the middle east, certain countries whom are a member of OPEC have been continuously producing and selling oil at a cheaper rate than the US can.

This essentially has reduced the going rate of oil and implies that the US can no longer produce without sustaining a loss

Crude Oil

This can be definitely classed as a subset of Supple & Demand – but not in it’s typical raw form.

Crude Oil explained

Crude Oil

The Conclusion

There is clearly more than meets the eye to Crude Oil – A simple Supply and Demand analysis does not suffice

Although we may assume classical techniques for analysing oil’s price, it proves insufficient in many cases

This is abundantly clear for Oil – but we want to remain objective – we don’t want to let our personal beliefs or prejudices sway our decisions

It is simply our aim to capitalise on price movement, neglect and subjectivity and as such successfully trade oil movements

It has also been forecasted that should the US continue to produce it will run out of storage by earliest May 2015, it has been said

Certainly supply figures from the beginning of the year to date support this and should the same come to pass we might yet witness a further bearish sentiment

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