The oil prices continue to fall thereby impacting the confidence of the oil traders. The downturn in the markets could also be considered a reason which is fuelling the downtrend in the oil prices. The strong sell-off in the equities was witnessed on November 21, 2018 which could dent the sentiments of the market players. The stock markets are sensitive to the global macro news, and any negative news has the potential to disrupt the equities which might prompt the players to liquidate the holdings. The increased concerns related to the weaker economic growth and slowing earnings has been weighing on the investors’ sentiments which has severely impacted the markets.
The significant downturn in the equities raises the concerns for the economic slowdown which could, in turn, impact the demand of the oil products thus, adversely affecting the prices. It seems like the oil prices are not done with impacting the traders’ sentiments. The market observers are of the view that the oil prices might further decline moving forward on the back of higher US shale production as well as weaker economic outlook. However, another factor which might have weighed on the oil prices is the recent comments from the US President for Saudi Arabia. The US has stated that he won’t be punishing the Saudi Crown Price for the death of Jamal Khashoggi. However, the oil traders might have assumed that the kingdom will not be cutting the oil production. The US President has been urging OPEC as well as Saudi Arabia not to do anything which would lead to a rise in the prices.
The market participants would be keenly watching the meeting of Organization of the Petroleum Exporting Countries or OPEC meeting which would be taking place in the next month. The market players are of the view that a cut in the production levels might be adopted. Moreover, there are also increased fears regarding the strong fall in the oil prices because of the situation of oversupply like it was in 2014. No so long ago, the market players were pressurizing that the OPEC should increase the output levels so that the oil prices do not touch the $100 mark. There were tensions in the oil markets about the supply shortages because the US President Donald Trump has imposed sanctions on Iran. Later on, the Trump administration decided to go soft and granted temporary waivers to some of the buyers. The meeting has been scheduled to take place on December 6, 2018.
Even though the market players are expecting that the OPEC would go for reducing the production levels of oil, the exact level is still not decided. Therefore, the players need to carefully analyze the macro factors before they execute the trade on the oil prices. In the current scenario, any news which is directly or even indirectly related to the demand and supply of oil has the potential to affect the oil markets and also the investors’ sentiments.
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