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Trading Lessons

Crude Oil CFDs - What to Expect in the Coming Months

Commodities / Crude Oil Jul 29, 2016 - 02:01 PM GMT

By: Boris_Dzhingarov

Commodities

The oil market is globalised, and it works for 24 hours a day. It is also very sensitive, so prices are constantly fluctuating. This is why day traders can benefit from this market, particularly if they trade on oil prices with the help of CFDs (contracts for difference).


If you plan on working with a crude oil CFD broker in the near future, continue reading to learn more about what you can expect from these CFDs in the coming months. This will help you make the most sound financial and trading decisions that will yield the best results.

Much Higher Oil Prices Expected in Coming Months

Experts have been talking a lot recently about the fact that oil prices will be much higher in the near future. This is because the actual cost of producing oil has actually doubled over the last few decades, particularly since the ‘90s. For the global economy, that is not good news at all.
Drilling activity, however, has been fluctuating. As of July 2016, drilling activity was at its highest point since March of the same year. But that number is still 30 per cent under the rate of drilling at the beginning of the year.

Demand Has Decreased, and There Is a Lot of Supply

Another factor that will affect oil prices is the fact that, as of July, the supply of oil has been overabundant, while the demand for it has actually gone down. The global demand for oil in the third quarter of the year was growing at less than 1/3 of the growth rate at the same time in 2015. And the growth has been slower because it has been weighed down by slowed economic growth. As demand from various developed economies has been falling, growth from India and China has also slowed down. As a result, US crude oil has hit a three-month low.

What to Expect

Over the next few months, until around November 2016, oil prices are predicted to fall. Therefore, if you are planning on trading in crude oil CFDs, you could benefit if you make your trades wisely. Prices will continue to fall or at least hold relatively steady until around October. November is projected to show a bit of an increase in crude oil prices, with a pretty continuous rise in prices throughout 2017.

Within the next six to nine months, the demand for oil should begin to increase again. At that point, it should also begin to exceed the production of oil, thereby allowing prices to start rising again as supply falls and demand increases. Even though there are elevated storage levels of existing oil that can be used to keep prices more stable, the pricing will continue to increase over time.

The key to remember here is that oil prices are always changing, so it is important to keep an eye on the news. Even though these predictions may very well come true, circumstances may occur that shift the industry and can cause prices to go in the other direction instead.

By Boris Dzhingarov

© 2016 Copyright Boris Dzhingarov - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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