Oil prices have varied greatly over the coarse of 2011. Right now oil isn’t in the best shape of its existence. The price of oil settled pretty low today. Reuters explains why oil reached a new low in the past 6 weeks.
Brent trading volumes again eclipsed those of U.S. futures, which have traditionally been the more heavily traded contract. More than 760,000 Brent contracts had traded by mid-afternoon in New York, the heaviest trading since late June and 50 percent above the 30-day moving average. U.S. crude trading volumes totaled 705,000 contracts, about 4 percent above that average.
Market players said with traders focusing on wider factors outside of the oil market, such as the euro zone crisis and the economic outlook, Brent was drawing more activity this week.
Brent is viewed as a better benchmark of global conditions, as high volumes of crude from Canada weigh down inventories at the U.S. Midcontinent, where the Cushing, Oklahoma delivery point of the U.S. contract is located.
“The focus on Brent has only intensified with these macro economic developments,” said Joseph Arsenio, managing director at Arsenio Capital Management in Larkspur, California.
“WTI is a contract that doesn’t relate well to most refiners, while Brent does. The prospect of a recessionary environment relates rather directly to the refiners and therefore to Brent.”
The drop in oil came as part of a wider sell-off in commodities, with benchmark industrial metal copper—viewed by some as a key indicator of future economic conditions—hitting a one-year low.
The Reuters-Jefferies CRB index, a 19-commodity global benchmark for the asset class, plunged more than 4 percent.
Gold, which hit record highs earlier this year as a safe haven amid the economic uncertainty, fell more than 3 percent as investors rushed into the U.S. dollar.
Oil is resilient and I have faith it will perk back up, if not see a real spike. New lows could be new highs. Watch oil closely, it may surprise you soon!
Quotes taken from report by Reuters, Read the entire article here.
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