Oil, an interesting case study

26 thg 4, 2020

Oil has links in the peaks, an interesting case for oil. We need to take note that major events can affect oil, causing it to go either up or down.

Causes of Oil Fluctuations/Drop

1. OPEC Cartel meeting with Mexico and Russia, Oil prices went up but then went to a downward spiral after Mexico walks out of the meeting
2. Donald Trump’s tweet to say that He is working with Russia and Saudi to cut oil production, this led to a long spike up in WTI.
3. Oil futures going to the negative, as the US is running short of space to store oil
4. Coronavirus pandemic causes people to stay at home and to stop going out, everyone is working from home and there is less demand for gasoline.

Possible outcomes for oil and possible fluctuations:
1. Lockdowns being lifted can cause a long spike up in oil
2. As Oil reach the max storage space, this can cause a spike down in oil again.
3. Vaccine for Covid 19 released, this could also cause a spike up in oil
4. Agreement for OPEC/Russia and the USA to completely stop oil production for a month

USOIL

Summary

Oil price has reached a bottom that has never been touched before, I do not have data to match but as we can see from that chart that it is even lower than 2003 levels. Hence, we should standby to long oil should it go up. This could be a once in a lifetime opportunity for everyone to be potential millionaires. However, we need to manage our risks as well, there could be a down spike if Oil were to reach maximum storage. Hence, it is best to only trade what we can afford to lose.