Every Wednesday, spot crude oil traders look to one the most significant fundamental data pieces; the weekly crude oil inventories report. The crude oil inventories report has the ability to sway the price of spot crude oil to a new swing high, or a new session low.
The crude oil inventories report that is released by the U.S. Energy Information Administration can move the price of spot crude oil on average of $1.90 the day the report is released. But the direction of the price move varies. The change in price is not dependant on higher or lower inventory numbers, nor is it dependant on the levels of gasoline or other distillates that the report measures. We would expect that a lower level of crude oil inventories would help to increase the price of spot crude oil. However, there is no significant trend correlation between the price direction and the release of the report, telling traders in which direction the price will move, up or down. We do know that price volatility is typically higher the day the report is published.
When trading spot crude oil during the release of the crude oil inventory numbers, traders also need to be looking at the direction of the general price trend of the commodity. Traders should also be tracking other markets that can significantly influence the price of spot crude oil. The movements of the U.S. dollar and crude oil typically have an inverse relationship; as the USD strengthens, the price of spot crude oil falls. The opposite is true in relation to the S&P 500. As the value of the U.S. stock index rises, so does spot crude oil prices.
This is only a small list of the factors that can affect spot crude oil trading. Traders need to make sure they are taking in all relevant information when trading spot crude oil. The EIA crude oil inventories report is a significant factor, but certainly not the only influencer on the market.
From Russell Glaser at Forex Yard .Com
Learn To Trade Oil and Gold ETF's
Share
No comments:
Post a Comment