At ForexTrade1, we consider 5 factors that strongly affect the price of oil/crude.
1st Factor – Demand and Supply
2nd Factor – Oil Rig Count
3rd Factor – USOIL Inventory
4th Factor – Technical Parameters
5th Factor – OPEC & OPEC + Considerations
DEMAND AND SUPPLY
- Crude oil prices can vary greatly, with a price near $105 per barrel in 2014 and $10 in 2020.
- The supply of crude oil is also determined by external factors, which might include weather patterns, exploration, and production (E&P) costs, investments, and innovations.6 For example, thanks to advances in technology that allow companies to extract oil from rock—so-called shale oil—the United States became the world’s largest producer of oil in 2018 and a major source of global oil supplies.
- In 2019, the U.S. produced approximately 13 million barrels of oil per day. Russia produced approximately 10.6 million and Saudi Arabia produced approximately 9.75 million barrels per day. No other country is producing even half as much oil as any of the top three. Iraq is a very distant fourth at 4.6 million barrels per day.
- As for the United States, its proven reserves are less impressive than its current capacity. The U.S. has 36.5 billion barrels
Canada (170 billion)
Iran (158 billion),
Iraq (143 billion),
Kuwait (102 billion).
The United Arab Emirates (98 billion)
Russia (80 billion)
Libya (48 billion.)
OIL RIG COUNT
The US rig count is likely to bottom at around 250-350 land rigs, according to 44% of respondents, down a further 22%-44% compared to the 448 in last Friday’s (24th April 2020) Baker Hughes rig count. Baker Hughes publishes a separate weekly rig count on Friday applying a different methodology to Enverus data
USOIL INVENTORY
Crude oil prices are dynamic. While it may take time for prices of some products to balance as the market reacts to changes in supply and demand, in the case of oil, the price adjustments can be instantaneous. When oil inventories go up, traders may question the demand for oil at the current price and immediately sell their positions, causing a price retreat.
TECHNICAL PARAMETERS
Fibonacci Calculator
Our Fibonacci calculator empowers you to generate basic Fibonacci retracements and extension values in both up and down trends, by entering the high and low values of your choice. This powerful tool helps traders predict approximate price targets.
Pivot Point Calculator
This tool enables traders to calculate pivot points in four different popular systems. Simply fill in the previous day’s high, low, and close to reveal resistance and support levels using Classic, Woodie’s, Camarilla & DeMark’s.
Currencies Heat Map
The Currencies Heat Map is a set of tables that displays the relative strengths of major currency pairs in comparison with one another. It is designed to give traders an overview of the forex market across various time frames.
Forex Volatility
The Forex Volatility Calculator calculates the historic volatility for major and exotic pairs over different time frames. The calculation is based on daily pip and percentage change, according to the chosen time horizon. You can define the time horizon by entering the number of weeks.
OPEC and OPEC + CONSIDERATIONS
Despite ongoing geopolitical and diplomatic turmoil, OPEC and its new petro allies – led by Russia – emerged with an agreement to boost crude output by 1 million barrels per day (b/d) in the name of ‘market stability.’ This was a major achievement at the recent OPEC summit in Vienna.
The deal represents the latest successful policy effort by the 24 members super cartel, informally referred to as the ‘Vienna Group’ or ‘OPEC+,’ to put their thumb on the scale of global oil markets. And it’s a huge thumb indeed.
OPEC’s 14 members control 35 percent of global oil supplies and 82 percent of proven reserves. With the addition of the 10 Non-OPEC nations, notable among them Russia, Mexico and Kazakhstan, those shares increase to 55 percent and 90 percent respectively. This affords OPEC+ a level of influence over the world economy never seen before.
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