Recent Drop in Oil Prices Reflects Stronger Dollar, Stock Slump
Some oil traders and investors were surprised on Friday, February 2, 2018, to watch as Brent futures oil prices dropped almost a dollar and a half in a single session. Although its high earlier in the day had reached $70.02, by early afternoon, it had settled back down to $68.53.
There are many factors that influenced this downturn. One of them, certainly, was the announcement by the U.S. Energy Information Administration that U.S. crude oil production exceeded 10 million barrels a day in November, a rate of production not seen since 1970. Higher production alone, however, wouldn’t push prices that much lower. Many other economic conditions also played a part in this bearish turn for oil futures.
Both Stock Markets and the Dollar Impact Commodities
While recent years saw a weakening of the inverse relationship between oil prices and the value of the dollar, this correlation once again seems firm and in play for those investing in oil. The desire to trade crude oil is often linked to concern about the strength of the dollar. Oil traders hedge issues like inflation or decreased buying power by purchasing oil futures, for which there is always steady demand.
In short, the weaker price of oil right now is partially tied to the international strength of the dollar. Another factor is clearly the recent dip in the overall value of popular market benchmark stocks. In fact, the DOW Jones Industrial Average tumbled more than 2 percent in late Friday trading.
Trading Oil Online Allows for Investors to Benefit From Market Changes
After several weeks of rather bullish price increases, this minimal downturn in crude oil prices and futures shouldn’t concern those who engage in oil trading. After all, the daily fluctuations in price per barrel almost always present an opportunity for profit.
Trading futures on the Oil Forex is an ideal way for those with market savvy to capitalize on short-term trends in prices. Even with the drop in oil prices noted here, the average price per barrel remains close to three-year high prices in recent trading sessions. Buying oil when the price stops decreasing and then selling it when prices go back up is a way to profit off of market fluctuations.
How to Trade $10,000 of Oil with a Few Hundred Dollars
With an online forex trading platform you have the ability to trade with leverage of up to 100:1 buying power. That means that you could control an oil trading position of 1000 barrels of crude oil with only a couple hundred dollars. The price of energy changes daily, and you can take advantage of these market price fluctuations. With a live account your capital is at risk. Start today by opening a practice demo account.
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