Crude oil futures for January delivery rose as much as $2.65, or 6.3 percent, to $44.72 a barrel in electronic trading on the New York Mercantile Exchange. It was at $44.10 a barrel at 12:57 a.m. London time.
I do not think production cut by OPEC will create a big rally in oil price. Why? Let us analyse why oil price has gone up to $145 last year: it is huge number of speculators. With this current economic situation, most speculators have fleed. So unless the speculators are back, we are not likely to see any sustainable rally in oil price.
Fundamental is weak for oil:
a) Yesterday US reported that inventory for refinery product surged significantly, indicating consumption is deteriorating seriously amid high unemployment and poor economy.
b) Apart from the US, China has also recorded fall in oil demand. In November, oil imports in China dropped 1.8% YoY to 13.36M metric tons, the lowest in a year and the first decline since July.
Technically on the chart, oil is in a steep downtrend (see below for oil chart). Hence in my view, any rally for oil is a selling opportunity.
Nymex oil contract is too huge for normal retail traders like me and you, whereby value of 1 point is US$500. Now supermini oil contract is available in a European platform, value of 1 point is only US$100, click here to view. If you are opening the account, choose Standard account for account opening.
Risk Disclosure: Oil and Gold trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to participate in the futures trading markets. Don't trade with money you can't afford to lose. This website is neither a solicitation to invest nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
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