There has been a decent bullish rally in the oil price from the last year after OPEC put an oil production cap in the global economy. Most of the professional oil investors in the global economy made a decent profit by trading the live oil market at that time. However, in the last couple of month, the price of oil is confined to a narrow region or in other words it can be said that the price is now in a sideways movement. Most of the leading oil investors in the global economy are now overly cautious about the next movement of the oil price as an imminent breakout in the price of oil might create extreme volatility. So of the leading oil investors have already booked their profit in the global market and waiting for a clear breakout to trade the oil price. Some of the optimistic investors are saying that the breakout will occur in favor of the recent bullish move as OPEC is most likely to tighten the oversupply problem of the oil industry. However, if the oversupply problem persists then we might see a bearish breakout in the oil market.
OPEC cuts U.S drilling: In the last one year, the U.S government has added more than566 oil rigs in the global economy to increase their current production of oil. Such a large-scale oil drilling will significantly increase the current supply rate of oil in the global market and ultimately the price will sharply fall. However, OPEC has already taken action regarding this such mass scale oil production. The Western Texas Intermediate crude doped by o.1 percent in the global market and traded at $54 a barrel. On the ICE futures exchange in London, the Brent oil incurred a 2 cent loss and traded at $56.40.To be precise the price of oil is now trading at a narrow range in the global market and most of the professional investors are trading the narrow range with a tight stop loss. However, the price has remained in a confined region for a long period of time and most of the traders are now thinking that the market will break out at any moment with the fundamental news release. If we see a bullish breakout of this confined region then we will see another strong bullish rally in the price of oil but a bearish breakout will again create an oversupply problem in the global economy.
The sentiment of leading oil producing countries: Most of the leading oil producing countries in the world has appreciated OPEC decision since the oversupply problem has mitigated to great extent. Most importantly the falling price of oil has found some solid support in the global market as the demand is increasing compared to the current supply rate. Some of the leading oil producing countries like Saudi Arabia and Kuwait has already cut a significant portion of their current oil production and has given a decent bullish pressure in the oil price. Kuwait has already stated that they are going to limit their current production to 1.8 million very soon and they have already reduced their production more than they promised. On the other hand, Saudi Arabia has also limited their current production of oil and given the oil bulls some hope in the global market. But countries like Iraq is still producing on a large scale and most of the investors are thinking that if it continues in such a fashion than the price of oil again fall in the global market. Due to this clouded sentiment, the over conservative traders are still staying the sideline for the better trading opportunity.
Economist overview: Most of the leading economist in the world are thinking that OPEC will be able to control the energy field in near future and the price of oil ill rally higher in the global market. The first drastic step since 200 was the oil cap production by OPEC. Most importantly OPEC has restricted the number of mass oil drilling in U.S to bring stability in the energy field. On the other hand, most of the leading producing countries like Saudi Arabia and Kuwait is also extended the help to OPEC to bring stability in the price of oil. However, Iraq is still producing more than 4 million barrels per day which are also fueling the selling pressure in the oil industry but OPEC has stated that this problem will also be taken care of. To be precise most of the leading oil producing countries along with OPEC are more active towards bringing stability in the industry. On the other hand, the U.S government has also stated that they are not going to produce excess oil the global economy and they will also participate to bring stability in the oil industry.
Summary: There has been massive chaos in the energy field from the very begging of the last year, however, things have settled down to a great extent after OPEC put a limit in the current production rate oil in the global economy. Leading oil producing countries like Saudi Arabia and Kuwait has also taken active participation to bring stability in the energy field and this has created a strong bullish sentiment in the oil traders. Most of the oil traders in the global market are waiting for the breakout of the current consolidation trade the market.