| | | | This is part 3 of my article mini-series on oil.
Over the past two parts, we discussed the recent dip in crude oil prices and what’s been causing it, including global demand dynamics and OPEC's production decisions.
If you haven’t read those yet, I recommend starting with Part 1 here.
Today, we'll explore another key part of the recent drop in oil prices: seasonal trends and some of the more intricate political aspects.
One key thing that a lot of traders forget about is how seasonal trends affect the price of crude oil.
Typically, we see crude oil prices rise from February to July, followed by a correction in August and September.
Prices often start climbing again in October, coinciding with the new fiscal year for many municipalities in the U.S.
Right now, we're seeing crude oil in its seasonal weakness, and it may stay this way for a bit longer.
Despite this seasonal trend, we witnessed a significant pop in oil prices yesterday, with crude jumping almost 4.5%.
This sudden spike could be attributed to short-term market reactions or geopolitical tensions.
But, today we've seen the market give back about half of that gain, showing how volatile it can get.
From a political perspective, future policies could also impact crude oil prices. If Harris were to become president, her stance against fossil fuels could lead to stricter regulations, potentially impacting crude oil prices negatively.
On the other side, a Trump administration might push for increased fossil fuel production, potentially leading to lower crude oil prices, similar to what we saw when he was previously in office.
Additionally, the economic policies of the Federal Reserve, particularly concerning interest rates and inflation control, also play a role in shaping crude oil prices.
Higher interest rates can strengthen the U.S. dollar, making oil more expensive for other countries to purchase, potentially reducing demand and putting downward pressure on prices.
Overall, while the crude oil market is currently in a period of weakness, a mix of global demand dynamics, seasonal trends, and political influences will continue to shape its direction.
If seasonality comes into play, a soft August might give way to higher prices in September and October. Keep your eyes on ticker /CL or WTI which are both for crude oil futures.
— Geof Smith
P.S. I just went live to share a discovery I’ve made on targeting one of the most powerful asset groups for weekly income. Check it out right here! | | | | |
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