Oil volatility is about to kick into high gear

2019 has delivered for the most part a one-way move higher for oil prices as OPEC + production cuts have successfully stabilized prices. WTI crude has rallied over 40% this year and prices could be ripe for a massive pullback despite uncertainty to major geopolitical risks (Libyan impending war, Mexican crude about to collapse, and Venezuelan production disruptions).

Many expected a rebound in eurozone’s private sector activity but they were disappointed this morning. The global demand picture remains mixed but so far signs are looking optimistic for a pickup in the second half of the year with a China-US trade deal expected by early June at the latest.

OPEC punted their extraordinary meeting to see what the US will do regarding Venezuela and Iran sanctions, but that could have been a mistake, as Russian support for continued cuts could be waning.

The big risk to lower oil prices remains the US, whether it’s Trump’s tactics to talk down oil by threatening using their reserves or the continued rise in US production. Rigs are building up again and by summer time we could see start to see many question OPECs relevance again.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya