Stock exchange news, oil. Translated from Greek, oil means “to flash, to ignite”. Current oil use is so wide that it has become the major fuel worldwide. It is this time of goods that is carefully watched by financial experts, investors, and businessmen.
Oil export currently gives major profit in Russia. Analytics of
Masterforex-V Academy sum up annual results. The dynamics of oil price in 2011 and predictions for 2012 are provided further.
For investors: major performance indicators of 2011 Events at oil market during the last week of December 2011. Five last days of December have not been quiet for the
USA and Iran. The price of February contracts on futures of WTI oil has risen by 0.2% to 99.85 dollars per bushel. In December maximal price of such contracts has amounted to 100.16 dollars per bushel. Before the last leap the value of papers has risen by 0.29%. Speaking about Brent grade, the cost of futures contracts is also rising; it has risen by 0.03%, having reached the point of 108.04 dollars per bushel.
What was the reason of such change?
The prices have gone up after the decision of Iranian government to block the Strait of Ormuz for tankers as an attempt to avoid tighter political sanctions from the
USA. This natural object is the main shipping route for export of oil and gas from the countries of Persian Gulf. As a response to such statement, America announced to be ready to resist such panic decisions of Iran.
According to the experts of
Masterforex-V Academy, such leap of the price of WTI and Brent oil has certainly been caused by emerging geopolitical risks. Due to the fact that oil is the most significant raw material worldwide, its price will keep rising.
Russia occupies the 7
th place according to the volume of oil reserves, a little over 6% all global reserves, and the 2
nd place according to the volume of oil recovery:
Oil price has on numerous occasions been record high this year. The top point was reached in April 2011 due to the situation in Middle East and North Africa:
Minimal cost as of the 1st day of the month was fixed in January 2011; it amounted to 94.6 dollars per barrel.
The average cost of Urals oil, which makes up the major part of Russian export, has reached 109.35 dollars per barrel, having gone over the point of 2010 by 40%. The average cost of oil product in December 2010 has reached 89.5 dollars, whereas this December it amounted to 107.6 dollars.
Factors that influence oil costwillleadtocheaperprice.
■ dollarrate. As a result of dollar bearing the title of world reserve currency that has high demand worldwide, just as oil, these factors are interrelated. Higher dollar rate has reverse influence on oil price, whereas lower rate, on the contrary, leads to the price rise of black gold;
■ factor of seasonal use of oil. Мasterforex-V Trading System, oil future has formed bullish wave а(С) or reduced wave С 92.52 – 101.71. Strong bullish wave C of Daily level may be expected to be formed further; its nearest significant resistance will be provided by points 102.44, 102.78, and 103.95. The bullish trend will reverse and bearish trend will form only when pivot MF 94.84 is passed, which is to be followed by FZR.Winter, which is characterized by cold in many countries that are distant from equator, stipulates abundant use of electric energy and fuel for heating. Summer leads to the rise of transport use, stipulating higher price of oil, gas, and diesel fuel. Predictions of oil price in 2012 Analytics are expecting some fluctuations of price. The Ministry of Economy and Development of Russian Federation have changed its prediction about mid-term oil price towards rising – to 109 dollars per barrel. Prediction about the price of Urals oil in 2012 - 2014 has also been changed – to 100 dollars per barrel, to 97 dollars in 2013, and 101 dollars per barrel in 2014. Price policy in relation to Brent oil has set the bottom line at the point of 80 dollars per barrel and the top line – at 120 dollars per barrel. With the start of 2012 export duties in Russia will drop by 9 dollars, having amounted to 397.5 dollars per ton. Since January 01 export duty on deposits from North Caspian and Eastern Siberia are expected to drop by 7 dollars to the point of 194.1 dollars per ton. In January the unified rate of export duty on oil products will amount to 262.3 dollars, which is 6 dollars less than in December, whereas penalty rate has amounted to 357.7 dollars, which is 6.6 dollars less than its value in December 2011:
■ impact of global economic situation. Slower rate of global economic growth will have a particular impact on the volume of oil products use in 2012. Recession, which has already touched major oil users worldwide, will lead to smaller demand in 2012. Particularly for Europe, demand is predicted to drop by 3% in comparison to current use;
■ policy of African countries and Middle East. Next year oil supply from Iran to the countries with advanced economy may drop. Current heated political situation is close to military conflict. At present the countries own political changes are important for North Africa, Syria, and Egypt; therefore, outer oil price in 2012 is not worth trusting. After a set of military conflicts Libya is to be aimed at the recovery of oil deposits. Taking into consideration the current situation inside the country, there is little hope for such recovery. OPEC currently plays a significant role in balancing supply and demand. In 2011 the share of its members in global oil recovery amounted to about 50%. Therefore, it is up to OPEC to satisfy demand for black gold in 2012. Saudi Arabia, one of the most predatory producers at oil market, may favour the drop of oil price to about 80 dollars per barrel due to natural saturation of the country’s territory with this product. According to the experts of the Department of Current tendencies that define the characteristics of oil market bear macroeconomic character. World analytics define a number of crucial factors, which will determine supply and demand for black gold in 2012. First of them concerns global economic recession, second – general attention to goods, third – problems with Iran, forth – the rate of American dollar, and fifth factor concerns seasonal aspect:
■
Middle East policy. As mentioned above, political statements the heads of major oil exporters have an immediate impact on its price. Current situation with the Strait of Ormuz may lead to the shortage of the use of Iran oil by western countries. Similar reaction may result from putting more pressure on Teheran, which keeps nuclear policy that may question people’s lives. If the number of supplies drops, the price of oil is bound to change, or, to be more exact, rise twice;
■
fear of changing price. Worries concerning the future cost of black gold have a direct influence on its price. The major part of option contracts for the first half of 2012 that have been concluded at NIMEX stock exchange during previous six months mentioned the price range of 130 – 150 dollars per barrel. Optional demand has risen by a quarter and amounts to about 100 ths. transactions annually. As a balance to the contracts aimed at maximal cost exchange market players have started concluding optional contracts aimed at minimal cost. The number of held transactions with predictions of oil costing amount about 45 – 60 dollars per barrel in six-month period has risen by a third and amounts to over 60 ths. contracts;
■
economic recession. Oil supply may drop due to less rapid economic growth of world leaders. This
“Market Leader” Magazine and Masterforex-V Academy hold a questionnaire at the forum for traders and investors: in your opinion, will oil get cheaper?.
• no, the USA primarily does not want this;
• yes, oil prices have reached their peak
You are free to discuss this article here: forum for traders and investors
First columns include average volatility of seven major forex pairs, then the spread for each pair, the following columns represent volatility divided by the spread. What do these simple calculations demonstrate? We get the pair's size of fluctuation per one unit of its minimum risk. The higher the resulting value, the more beneficial it is to trade the pair from the mathematical point of view. The winners' trio looks this way: top place - EURUSD, second and third - USDCHF and GBPUSD, respectively. Of course, you may have your own volatility data and the broker's spread values. These are sample calculations. At any rate, I suggest making them independently not only for majors, but also for crosses. Calculate the average daily volatility for the past year yourself and compare it to the spread. The third approach to defining the best instrument lies in a plane that combines personal preferences and objective parameters. This is where we assess how hard or easy it is to trade a certain pair. Simply put, we need to see the charts. I take one period for the above majors as material for research. EURUSD
GBPUSD
USDCAD
AUDUSD
NZDUSD
