Oil had a pretty strong day in the market on Tuesday, and for good reason. Not only are investors awaiting an update from OPEC with regard to an oil production cut expansion, President Donald Trump dropped a bombshell with a proposed plan to sell off half of the US strategic oil stockpiles. Today, we’ll talk about both stories and what binary options traders should be watching for with regard to oil ahead.
OPEC Meets Soon!
One of the reasons that oil had a relatively strong day in the market on Tuesday has to do with a coming meeting of OPEC members. In fact, the Organization of the Petroleum Exporting Countries is expected to meet in Vienna on Thursday. The meeting is centered around whether or not OPEC leaders believe that OPEC should extend the deal it came to in December of 2016
Under the oil supply cut deal, more than a million barrels of oil per day were cut out of OPEC production. In reactions, 11 non-OPEC members, including Russia, also agreed to cut production, bringing the total production cut between all involved to 1.8 million barrels of the commodity per day. However, that production cut is expected to come to an end after the first half of 2017.
Now OPEC will be deciding whether or not to extend these supply cuts. While Saudi Arabia believes that extending output cuts by 3 additional months will help to re-balance the oil market. However, other members of OPEC don’t agree with the idea that further supply cuts will work without major producers, including the United States, Canada, and Brazil, reducing production rather than increasing it.
United States News Is Also Assisting With Gains
While OPEC news helped to push the value of oil upward, there’s no doubt that another factor that helped was news out of the United States. First and foremost, we will soon see the U.S. crude oil inventory report. Many are expecting that it will show that oil inventories in the United States have dropped for the 7th week in a row. In fact, analysts are expecting for 2.7 million barrels of oil to be shed from the US stockpiles. This report will be released on Wednesday.
Another factor out of the United States has to do with President Donald Trump’s plans to balance finances within the United States government. In fact, the White House recently released a plan surrounding the balancing of the budget. In this plan, the White House said it wants to sell off half of the nation’s 686 million-barrel stockpile of oil in the time frame between 2018 and 2027. In doing so, the White House expects to raise $16.5 billion. While the budget at the moment is simply a proposal, this could be passed, leading to a massive sale of oil. In a statement, Carsten Fritsch, commodity analyst at Commerzbank, had the following to offer…
“Congress needs to agree to this which is rather uncertain… But of course, it could weigh on the back end of the forecast.”
What Binary Options Traders Should Be Watching For Ahead
Moving forward, binary options traders should be keeping a close eye on oil as the commodity is likely to present several opportunities ahead. However, if you want to turn these opportunities into a profit, it’s going to be important to follow the news. On the potentially bullish side of the coin, watch the OPEC oil production cut and the US oil stockpiles report. If these stories go as planned, oil could find its way upward. On the bearish side, keep an eye on the White House’s planned budget. If the United States does start unloading oil stockpiles, it could flood the market, adding more supply in a world that is already experiencing a glut.
What Do You Think?
Where do you think oil is headed moving forward? Join the discussion in the comments below!