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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Remember Crude Oil?

Commodities / Crude Oil Sep 21, 2007 - 04:55 AM GMT

By: Regent_Markets

Commodities There have been many activities missed by headlines writers over the last week due to the focus on the banking crisis.On any other week the rise in the price of oil would be top of the headlines says's Michael Wright. Oil prices reached record highs for the seventh straight session last Wednesday after refineries in California and Texas said they had new outages and the government reported surprisingly large declines in oil inventories.

Most of the traders have blamed the rise in price for oil on the fact that  oil refineries have been shutting down some of their refining systems for  maintenance while others have broken down. Even during the week of Hurricane  Katrina oil prices stayed below the 77$ mark, a level that has been  surpassed this week easily.

Oil prices have a direct effect on consumer spending, with consumers  flinching at price at the pump. Eventually oil companies and petrol stations  pass on these price increases meaning it can have graduating effect on the  nation's finances.

As a result they go out less, and try to stretch their  remaining money by spending less on frivolous items. The retail corporations  on the other hand will feel the pinch twice as hard, as not only will their  sales will be decreasing, their operating expenses will be increasing due to  a higher heating bill. As for relief on the oil price, there doesn't seem to be any help in sight, while the hurricane season is ending the cold weather has increased the need for heating oil which has caught many companies off-guard. Also not helping the matter is a new weather system in the Florida area which could turn into a stronger tropical storm.

While traders aren't worried about the situation, companies are taking precautions and are evacuating non essential personal. There are many ways a trader can profit from an increase in oil prices. When oil spikes up in price, stock indices tend to suffer. Other areas are the currency arena, where the USD/CAD pair is known as the commodities pair. When oil prices increase the pair tends to go lower.

During last weeks slide the pair has lost almost 5 cents, which has almost brought the Canadian dollar to par with its American neighbor. With Oil not hinting at a reprieve and tension mounting in Iran, it could be some time before the USD/ CAD reverses its decline.

With a trader can profit from this possibility by buying a  no touch trade, which compensates the trader for predicting the level which  the pair won't touch. A no touch on the USD/CAD with a trigger above the  daily high before the slide which is at 1.06 with a 25 day term to maturity  can potentially yield 7% ROI. This means that if the US Dollar remains weak  against the Canadian Dollar you could win.


About Regent Markets Group:   Regent Markets is the world's leading fixed odds financial trading group. Through its main multi-awarding winning websites, and, it has established itself as the leading global provider of a unique, powerful way to trade the world's major financial markets. The number, length and variety of trades available to our clients exists nowhere else in the world. Tel  (+44) 08000 326 279

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