Oil was on a turbulent rollercoaster ride last year, but if you thought that prices would stabilize in 2015, you’re mistaken. The commodity is still making headlines. It is proving to be popular among traders thanks to its fluctuating price movements and high volatility.
Instability in Northern Iraq and the threat that ISIS posed to the oil fields sent prices surging in the summer of 2014. Following the spike, came the decline. Rising production in the US and in particular from the shale fields, combined with a refusal by the wealthy Saudi Arabia to cut their production, forced the price down to insane lows in the last half of the year. So cheap was the asset that oil producing countries like Russia were left unable to balance their budgets and break even, hurting Putin’s struggling economy which could not afford to halt its production and lose such a substantial chunk of its income.
Trade oil with a good binary options broker
As we entered the New Year, oil was trading lower than $50 per barrel and analysts anticipated that its price could go even lower given the high production. The fall had already prompted a flurry of action amongst traders who were capitalizing on the dramatic movement. Many used the online system of binary trading which enables you to profit from both the highs and lows of a market asset. Once you have set up an account with a binary option broker, you are then granted access to their trading platform and range of tradable assets, and can make a profit of around 80% by predicting the direction of an asset like oil in your chosen timeframe. As the oil price kept moving down, so binary traders kept placing their downwards trades and making profits.
Oil prices in 2015
2015 however conveys a different story when it comes to the price of this asset. The fundamentals so far this year have led to mixed opinions about the long-term future of oil prices. So why are some signals pointing towards a price increase while other data gives off the opposite message?
On the one hand, after the dire lows, many companies cut their spending on new oil production and the US cut back on the number of rigs drilling for oil. Crude oil prices rose in the middle of April thanks to the effects of the reduced production, combined with the threat to oil supply that is caused by tensions across the Middle East: ISIS is expanding its violent reach, and Yemen is locked into civil war which could potentially also destabilize its neighbor, oil giant Saudi Arabia.
However, that’s not to say that we’ll see a steady uphill climb in prices from herein. Chinese manufacturing fell in April 2015 to its lowest level in a year. The news sent prices below $60 again given that China has been a big buyer of oil in the last decade, and has made use of the commodity to fuel and strengthen its growing economy. The recent weak manufacturing data now casts a shadow of doubt over the country’s future demand for high quantities of oil.
Adding to the China effect is that fact that output is still climbing in certain countries. Some analysts have calculated that production exceeds the demand by between one and two million barrels per day. That’s a significant different, and as any trader can tell you, the difference between supply and demand is the best indicator of a commodity’s price.
The short-term advantage
As the oil analysts and commodity experts give their different long-term forecasts, many online traders seem to be avoiding high-risks and refraining from committing to long-term positions. They’re opting to trade the present trends instead. With a good binary option broker, traders have the ability to place any trade in the time frame of their choice. That means that you are able to profit from following the current trends, even if that means predicting a rise one day and a fall the next. In the current and volatile oil market, many seem to believe that short-term trades aren’t just the best way to react to the latest movements – they’re the only way.