Crude Oil Staying Strong

The Price of Oil in the Markets

The price of oil has declined over the last several trading days, descending from recent highs near $56 per barrel. This high point had been the result of a 3.5 percent surge in price, but now the general trading public appears to have grown lukewarm to this sentiment. The growth that crude has seen in the last several months has been great, so it does make sense that quick movement would be seen with some skepticism. However, this doesn’t mean that the overall trend of oil is still not upward. It looks like this is just a temporary dip; one of a corrective nature.

Based on a quick scan of fundamental data, this dip in price looks like a momentary retreat. Saudi Arabia and Russia both appear to be sticking to their promises to cut back on oil production, and if this is adhered to, then oil prices will eventually start rising again. Unfortunately, short term traders are at the mercy of bumps and dips like this. Even if prices should move upward, it does not mean that they will always move upward. Market volatility is one of the biggest enemies of traders, but it isn’t something that needs to just be left unaddressed. As a trader, you have many ways to address volatility.

One simple way is to expand your market reach. Diversity is a key component of a healthy retirement portfolio because, when done right, it minimizes the amount of damage that volatility can have on your money. For traders, diversity might not seem to apply at first, but it does. For example, if you trade commodity futures, by branching out into other types of trading, such as oil binary options, you can still profit off of changes in the price of crude, but you can also make small adjustments to your strategy, hedging positions and boosting earnings through reactive and well timed binary trades. Just as a day trader in the stock market can still take out long term positions that they believe will have large payouts in the future, you can have both long and short term holdings of the same asset. This is what binary options accomplishes for you in this respect. Even though oil appears to be on the rise looking out into the next year and beyond, there are likely to be drops along the way. Using another trading tool to profit on either side of things can help you to make more money, alleviate the short term losses that you might experience here and there, and give you a better understanding of how fluctuations in price can be better used to your advantage.

Oil is the world’s most heavily traded commodity, and because of this, there is a lot of data about it out there. Looking at oil and energy indices that closely follows the price of crude and brent oil can be a helpful way to gauge what is going on with oil, and what its price is likely to show in reflection. What we are seeing is that all of the major oil measures are also showing signs of strength. The U.S. Oil Fund has recently risen by more than 3 percent and the iPath S&P GSCI Crude Oil Total Return Index ETN has risen by more than 4 percent over the same period of time. The Energy Select Sector SPDR ETF rose by a little more than 1 percent, too. This latter index takes other factors than oil into account, but it is definitely worth taking a look at these before finalizing a decision on how to act on oil over the long term.