With oil prices highly volatile, many are trying to find an angle to profit from the black gold’s ups and downs. While buy low and sell high remain true maxims, there may be other ways one can win in the oil market. With the number of financial instruments available to traders, there is always a way to invest wisely.
I sat down with Donald Levit, a strategist from the market commentary and financial news site EconomicCalendar.com. Donald has been in this industry for some time and is pleasant to speak to.
How Did You End Up Writing Market Commentary?
Like some of my other colleagues, I was a trader for a number of years before I began writing small blurbs with advice to colleagues and associates. After that, one thing led to another and I began writing more and more, additionally I started covering more industries that were less common. After realizing I enjoyed the work, I set off on writing market commentary more and more, eventually freelancing until joining the Economic Calendar team.
Tell Me About Economic Calendar – What Topics Do the Site Cover?
Economic Calendar covers, as the name suggests, economic events from the calendar. Additionally, we cover a lot of commodities and indices that many sites don’t- including steel, coffee, cocoa, Shenzhen stock market, and France’s CAC 40. That’s not to say we don’t have other areas that many traders are interested in, including forex and trending stocks. Our analysts are experts in their respective fields and provide readers unique market commentary on a daily basis. The site was founded in late 2015 with the principle to provide quality market commentary all in one place. Our team has grown to 8 analysts strong over the past 6 months, with each specializing in key areas.
Tell Me What is Going on in the Oil Industry
The big picture problem is simple- there is a supply and demand imbalance that is affecting the prices. Recently prices started rising due to supply concerns, Canadian production is disrupted and Nigeria’s is under attach from militants. While prices have surged past the psychological level of $50, keep in mind major producers such as Saudi Arabia, Russia, and Venezuela are cash-strapped and aren’t looking to cut production.
Those countries have obligations to deliver oil futures and aren’t going to cut production; it’s not in their interest. They need money now and will sell as much oil as possible to make up any budget shortfalls, which may seem counterproductive but is the reality.
Additionally, Iran is back in the oil market, adding even more of the commodity to the oversupplied market. Iran is looking to increase production even more by the end of the year.
OPEC’s recent meeting was useless, as I wrote in an earlier article. The most interesting thing about that meeting was what the delegates will select for dinner.
Remember that the US shale producers that OPEC is trying to price out of the market are not going to go away.
How Can Investors Get in On the Action?
There are different instruments traders can use, including options, ETFs, CFDs for those living in countries where they are permitted. Even investing in stocks can be an indirect way of cashing in on oil, as many companies’ earnings are dependent on oil.
Read the news, although the way the market is right now, any bit of news can send jitters through the market. My advice is to keep focusing on the big picture, which, in my opinion, in the long-term does not seem too bright for oil.