Oil is the substance, which determines characteristics of the modern civilization, the wealth of the nations and relationship between countries. In the production sector for manufacturing of the consumer goods and heavy industry, for transport and agriculture oil is as important as oxygen for a living being. At the same time, limited supply of “black oil” is a scourge of the modern world.
Global oil price is a main factor, which affects both foreign and domestic economy of the countries. The price of oil influences on such important sectors as oil production, foreign trade balance and income of some countries. It also has a strong impact on the profit of investors and traders of Forex currency market.
The price of oil undergoes changes over the past 16 years (until 1990 oil prices have been relatively stable).
The fundamental factor, which obviously has great influence on the oil prices, is the policy of OPEC countries. The countries, exporting “black gold” headed by Saudi Arabia, have huge reserve of oil and as a result, have enormous influence on the fluctuation of oil prices.
However, we should not forget about the indirect factors, such as economic recession in the developed countries (the developed countries create demand on oil) and other unpredictable factors, such as natural disasters (fires, earthquakes and even high heat), as well as technological disasters (accidents in the large oil plants and military conflicts in the oil-producing countries.
Forecast on oil trend
Trading in the currency market bears risk of losing capital. Oil trading is not exception to this rule. In order to predict movement of oil price you need to take into account a lot of factors, which can affect price formation to a greater or lesser degree.
The only way, which helps to make accurate forecast of oil price movement, is to study thoroughly methods of fundamental analysis.
All events on the planet, in some way, affect demand and supply of the traders; can raise their concern or arose rumors among investors trading in the market.
I would like to give some attention to the technical indicators, which predict movement of the oil price. Trading with the use of these indicators is in some ways, similar to crystal-ball gazing. Even the most accurate Forex indicator cannot always accurately predict direction of the price movement. Why? The answer is simple: technical indicators are affected by the changes in oil price.
In your comments, please describe your method of forecasting oil trend. Tell us about its advantages and disadvantages.
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.