The Impact of Dollar On Crude Prices

oil-newOil reached $50 per barrel for the first time since November 2015. Investors had expected a positive outcome from the OPEC meeting in Vienna. However, market analysts believe the event is meaningless. Nothing of consequence came out of the meeting.

Saudi Arabia and Iran did not make any progress during OPEC’s meeting. Hence, no significant announcement regarding a freeze or a cut in June was made.

It is considered that OPEC is not a cartel anymore (a cartel having influence over the supply and prices of oil). Therefore, the market has turned its attention to the Fed as a critical aspect regarding the oil price.

Higher rates of interest along with less easy money are expected to complicate the oil business.

Experts believe that those who carefully monitor the dollar movement have the maximum impact on the direction of crude prices.

An assessment of oil trading daily would reveal that everything is front-end loaded. Traders and not refiners have the major control over oil prices.

However, the exclusion for a producer with a critical impact lies with Saudi Arabia. The reason for this being the kingdom could adopt a very aggressive tactic when it comes to production in 2016.

The government in Saudi Arabia is becoming much more entrepreneurial. The policymakers are engaging in several offshore drilling joint ventures. The market is closely watching the Saudi government’s next move.

In order to offset the production from Saudi Arabia, analysts believe cheap prices are assisting to ensure the global demand is up.

There is greater balance with regard to the global oil supply. The issue is expected to aggravate around August when there would be sufficient oil to get through the period.

A surplus oil inventory could drag oil prices downward since most of the supplementary demand in the US for gasoline in 2016 is front-end loaded for July.

Stay up to date with financial trading news by following Shaw Academy Reviews on Twitter. Shaw Academy, a Dublin based professional institute providing online professional and higher education.


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