The oil has been at the center of the attention in recent weeks, notably because of the volatility present in this market and the effects of the agreement on the reduction of the production of the black gold. The prices reflect the evolution of the situation of the oil market and the perception of analysts on its future direction. Can you think of a barrel of oil above 60$ ?
Why the price of oil does he have a high volatility ?
When you are doing commodity trading online, it is important to understand what moves the markets. We think in particular to the relationship between supply and demand as well as the psychology of the markets.
Some traders use technical analysis to visualize on a chart, the important levels. Use a trading platform, as the platform of UFX, you will identify the levels of psychological on which the markets react as the supports and resistances.
Oil prices have fallen sharply since the peak of June 2014 (resistance) with a high volatility and a more down to 45$ (support). The oil market is saturated with an offer well in excess of the demand which is forcing prices down.
OPEC and the agreement of the OPEC to influence the oil price
OPEC and major producer countries have decided to reduce their oil production in order to regulate and stabilize the oil market. The expected effects have not yet manifested, and the United States are the big winners of this decision, as the number of exploration wells is steadily increasing since the agreement of the OPEC in November 2016. An extension of the agreement of 9 months has just been decided.
So can we expect a strong increase in the price of oil ? It is possible, but the saturation of the market remains important, and the psychology of the players of the market strongly influences the evolution of the prices, therefore the volatility on the oil market. Traders, economists and oil producers do not have the same way to see the evolution of the markets and their objectives are not the same. In all cases, it is important to remember the power of suggestion (the effect of the announcement of the OPEC members, titles, journals, etc.) and the value of the psychology of the markets.