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Oil volatility is about to kick into high gear

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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.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. 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. Prior to OANDA 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, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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