Perhaps the only constant in the world of financial markets is change. But one thing never changes: Common Sense.
2016 is here and one of the big talking points going forward will undoubtedly be the price of Oil. We have seen some very interesting behaviour over the past week, and our traders have had some fantastic trades in this market which we detailed in our LIVE CHAT ROOM.
Recently, the head of one of the largest Oil producers in the world said he would not be surprised to see Oil at $10 p/barrel. Others are saying we could see Oil at $50 by the end of the year.
So where to for Oil from here?
Here on the desk we try and steer clear of predictions and focus on the here and now.
More importantly- trading what’s in front of us by using proprietary models that give us an edge. We show our clients how to build and trade such models from scratch and apply them in real-time, by using all the tools at our disposal. One of the tools we often fail to see is plain old common sense.
This year we will again be watching what the FED does. Will they stick to their word of gradual rate hikes? Do nothing? Or will we see a complete backflip should things get rocky? This is important as Oil will find it very hard (but not impossible) to move higher given the current oversupply and continued strength in the US dollar.
The FED (and other central banks) are a major player in today’s markets and common sense would state that they (like all other participants), will at some stage be tested by the market. If they get it right all will be fine. If they get it wrong, things can go horribly wrong like we saw last year with the Swiss National Bank.
And so we expect to see continued wild swings up and down in Oil until an equilibrium is reached, all the uncertainty has been absorbed and one side is WRONG.
It’s going to be a very exciting year in these markets with plenty of surprises for crude oil so BE PREPARED and use some common sense!
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