Oil has been a major topic among investors for over a year now, and for good reason. A massive supply glut in the commodity has caused its price to fall dramatically. However, it finally seems as though oil is back on the upward trend. Recent data with regard to inventories in the United States is causing excitement among investors. Today, we'll talk about the inventory declines we're seeing in the United States, whether or not this is likely to last, what we can expect to see from the price of oil moving forward, and how binary options traders can take advantage of the trends.
Recent Data Shows That US Oil Inventories Are Falling
Earlier today, news was announced with regard to the US oil inventories, and overall, it was surprisingly positive news. The US energy department reported that stockpiles of crude oil fell by 4.2 million barrels over the past week. This was a much larger decline in inventories than experts expected to see. In fact, recent surveys show that experts expected for crude inventories to fall by 2.5 million barrels.
Why Does This Matter
Oil like any other commodity is heavily dependent on the law of supply and demand. When supplies are up and demand is down, we tend to see declines in the value of the commodity. Adversely, when supplies are down and demand is up, we tend to see gains in the value of oil. For more than a year, the major concern among investors has been a massive supply glut. While the supply glut is still there, higher demand due to lower prices, and rebounding economic conditions, are leading to declines in the glut, and that's great news for oil and the energy sector as a whole.
Will The Declines In Oil Stockpiles Continue?
This is an incredibly hard question to answer, and I unfortunately do not have a crystal ball that I can look into in order to get a glimpse at the future. However, there are a few things that can give us an idea of what's going to happen…
Economic Conditions – When economic conditions are positive, consumers tend to spend more money on oil. However, poor economic conditions will cause consumers to spend less on oil. At the moment, economic conditions are starting to recover, and that's great news for the commodity.
Production – Production is another major factor. However, this one isn't looking good. While we are seeing decreased production in the United States, production around the world is still relatively high. This could support more of a supply glut in the future.
Time Of Year – In the United States, it is nearing summer time. This is when consumers tend to spend the most on oil as they travel more often. This could help to keep demand high.
What We Can Expect To See Moving Forward
While I didn't expect that it would happen so quickly, it seems like oil is finally starting to recover. While production is still relatively high, increasing demand is starting to level out the supply glut, and that's likely to lead to further gains in oil.
How Binary Options Traders Can Take Advantage Of The Trends
As binary options traders, it's our job to find trends in the market and exploit those trends for a profit. In this particular case, oil is likely headed further upward. As a result, binary options traders should be watching for strong call option opportunities in order to generate a profit.
What Do You Think?
Where do you think oil is headed and why? Let us know your opinion in the comments below!