Academy News Extremely low oil prices are tempting to trade

Extremely low oil prices are tempting to trade

Learn how to trade oil and surf the oil wave with Purple Trading.

Oil prices are at its lowest in the past 20 years and those who can make sure they are trading the most out of it. In Purple Trading, we are trying to provide traders with the best conditions possible so we are canceling commissions on oil. This means that you won't pay for traded volume and are free to trade as much as you want. And if you are new to trading, below, you will find useful video tutorials that will help you on your trading path.

A brief outline of the price war and its impact on oil prices

This economic conflict which has a significant impact on the actual decrease in oil prices is currently raging between Russia and Saudi Arabia (the leader of OPEC oil cartel). Due to the economic restrictions connected to coronavirus epidemy containment, Saudi wanted to limit, after an agreement with Russia, the oil production levels. However, Russia didn’t agree and Saudi Arabia, therefore, decided to declare a price war.

Saudi immediately started to increase oil production while lowering its price. And how did Russians react? It didn’t take them long to choose the similar tactics. That’s how the price war began. Due to this war, the market was overly saturated with crude oil in a way analytics don’t remember. In reality, it means that crude oil supply hugely overlaps its demand which consequently brings the prices down with an unbelievable amount. And nobody knows when this will end.

Oil price levels weren't spared from the further drop even after the OPEC+ unprecedented agreement to limit the production of oil to 9.7 million barrels per day came to action. This, in fact, meant an end to a price war between Russia and Saudi Arabia. However, the real data show that Saudis are still reducing the oil prices when it comes to the Asian market where the demand is currently the highest. This means that price war continues and oil producers are trying to sell the barrels way under their price on the spot market. And despite the mentioned production limit deal, the demand is still critically low and the market is overflowing with millions of barrels full of cheap oil. This can go on for several following months.

But one thing is certain. At this point, there’s nothing that would suggest that the oil prices should go up in the near future. This is the music for the ears of all those who are betting on oil prices to go down and “go short”.