What Has Driven Oil Prices Down to Current Levels?

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Aug. 25 (Bloomberg) -- RJ O'Brien's Phil Streible and Bloomberg's Greg Bender discuss the factors driving oil prices down to current levels with Scarlet Fu on "In The Loop." (Source: Bloomberg)

But what helped to drive them down to these levels?

This market has been extremely successful in digesting political arrests.

The airstrikes, depending on how you are measuring them, are starting to be effective in iraq.

Libya's output, despite the bad news there, has continued to be strong.

You also have seasonality playing in right now.

This is august, september, october, generally not the best months.

Shouldn't economic data the giving oil a lift?

Exactly, plus the fact, like we were talking about before, you have hurricane season coming up and traders are starting to look at things like that.

Plus, money managers are exiting the market, the lowest level participation in a year.

A lot of those metrics are stretched.

We are looking at things in the volatility market, the options market, to see if traders are going to take the other side.

With that in mind, how will you be trading oil at the moment?

If you're going to look at the futures contracts, you want the target to come into play because of the issues greg had outlined.

We are most likely going to trade down to that level, next week, especially if we have another build.

You start to look at a long futures contract.

It will be a little oversold at that price point.

The upside, around 95 and 96, i think that is all the gas they have.

They will buy at 90 and stock down at 80 nine.

Maybe widen it to 2000 if necessary if volatility picks up.

Take that target up and 95 or 96 gives you a good return.

Oil currently trading at about $93 per barrel.

Phil is waiting for it to drop to $90 and then he will be a buyer.

He plans to sell when it tops $96. he would actually make $5,000 on his trade.

I want to get back to you for a moment.

Gas prices are starting to come down as well, with crude falling and staying at these lows.

What that help -- won't that help to have a counter effect?


From a fundamental perspective but also a technical perspective, let's remember that global commodity prices like gasoline, crude, our pricing dollars, at alex -- the dollar had an extremely nice run in the last couple of weeks, specifically the euro and the yen.

A lot of traders are looking at that.

It will be a quiet week in the market this week.

Labor day weekend, have those pairs gone too far, too fast?

That is the question.

When we talk about trading futures and commodities, we also hear the word take.

-- tick.

The smallest amount a security can trade in.

For stocks, it is easy.

A penny.

Very standard.

For commodities, it gets more complex.

Not only do the sizes vary, but the amount it is worth can vary greatly.

Crude oil, the minimum tick is a penny.

It is $10 a tick.

Sober, $25 a -- silver, $25 a

This text has been automatically generated. It may not be 100% accurate.


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