Tradeline Financials - Oil Rising? - Week 49, 2014

Dec. 3, 2014 - PRLog -- Tradeline Financials is an independent, diversified financial services firm catering to all types of investors. Our goal is to understand, anticipate and meet our clients' changing financial needs with the vast array of high-quality products and services at our disposal.

Tradeline Financials - Oil Rising? - Week 49, 2014

Recently the major news has been focused on the global economies and how the Central Banks are dealing with the economic downturn we have been seeing of late. whilst this has been front page news, the price of oil has lost 30% since June and is at near 5 year lows.

Since the beginning of the year there have been several geo political instances that have had a direct affect on the supply of oil however there was very little coverage or acknowledgement by the markets as to the slow but sure drop in price as it went down month after month.

With the conflict in Ukraine, Libya, Syria and Iraq to name just a few, being major disturbances in the oil market and showing no signs of any resolution it was left down to OPEC last month to look to make sense of the situation.

One of the main reasons attributed to the fall is the US's switch to its shale gas reserves. This move taken early in the year was designed to reduce the US's dependence on imported fuels and obviously had a huge effect on supply and inventories.

Expectations were that OPEC would make some form of reductions to its production schedule however Saudi Arabia, its most influential member was firm on its policies and said it would only back a reduction in supply if non OPEC members, such as Russia would take some of the burden. It is to be noted that only one OPEC member, Qatar can sustain production at todays current prices, oil needs to be in the region of $100 per barrel for the majority of OPEC to be within the boundaries set by their reserves.

US Crude is still under $70.00 per barrel at $67.67 and has started to move in Asian trading today, Brent sitting at $71.16 was close to 5 year lows earlier this week and is expected to show some gains before the week closes.

Many have always seen cheaper oil as a way for economies to expand. This is certainly the case in the US where global corporations are bound to be happy with their oil costs so far this year. On the other hand, low oil costs can be a burden on emerging economies and if we take Europe as an example, cheap oil could be helping push the smaller economies further into deflation.

Major Global Indices as of 2nd December 2014:

Nikkei 225 - 17,722.89 (+0.34%)

FTSE 100 - 6,742.10 (+0.64%)

Dow Jones - 17,879.55 (+0.58%)

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DISCLAIMER  The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Tradeline Financials. All market data within this release is for your general information and enjoys indicative status only. Tradeline Financials does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.