Organization of the Petroleum Exporting Countries (OPEC) is scheduled to meet on January 4.
OIL: back to the rising curve?
Reports say, the Libyan general Khalifa Haftar’s army blocked the country ports and froze the major oil production facilities. As a result, the total Libyan oil exports dropped by more than 50%.
The global oil output is estimated at 80 million barrels per day. Libya, an OPEC member, has approximately 1 million, which is less than 1%.
Since the takedown of the Libyan infamous leader Muammar Al Qaddafi, the country has been in continuous turmoil. The world powers, especially those of regional influence, are involved in the conflict through direct and indirect assistance to the warring sides. Until now, the EU and Turkey have been mostly behind Prime Minister Fayez Al Sarraj sitting in the country capital of Tripoli, and Russia supporting Khalifa Halftar.
What’s the status
Recently, the peace talks in Berlin have taken place. Although the two Libyan leaders refused to talk directly to each other, the foreign country leaders expressed modest satisfaction with the results of the peace talks.
What’s in that for me
For you, there is an upsurge of the oil price, which you can use if you are trade this commodity. After the US-Iran conflict lost its momentum, there was nothing to boost the price. However, the Libyan problem raised the risks of oil undersupply and pushed it back up.
Now, WTI is traded at $59, right below the resistance of the 200-period MA and testing the 50-period MA. In the mid-term, the fact that the Libyan leaders failed to reach a peace concept themselves and only foreign powers forced them to cease fire, means that this agreement is likely to be as temporary as futile. Hence, the Libyan factor will continue being an underlying potential for the oil price growth. Therefore, you may keep it in your trade radar using information inputs to benefit from the oil price performance.
So what’s the tactic
Watch the news and how the conflict goes. As you can see, plus-minus 1% in the global oil output destabilizes the price. Use it accordingly to set your trade positions.
For example, as the conflict in Libya has received a dose of pacification from the foreign powers, we may conclude that the oil price will stay around its current level to look for the status confirmation in the short-term. But later, if the Libyan exports unfreeze and restore the normal levels of supply, the price is likely to get back down to the previous levels of $58.20 per barrel. Hence, it makes sense to buy now and look for selling at the mentioned level. If there is relative silence from Libya in the coming days, it means that the temporary ceasefire did have its effect, and the oil price will react to it accordingly. Otherwise, be ready to quickly close the position if the conflict escalates further after the Libyan leaders get back to their positions at home and re-group. In that scenario, $60 per barrel for the WTI oil will be a likely threshold to aim at.
For a long time, traders considered American Non-farm Payrolls (NFP) the most important release in the market. However, the situation has changed. Now US CPI moves financial markets.
United States Bureau of Labor Statistics will release monthly average hourly earnings, non-farm employment change (NFP), and unemployment rate on November 5, 14:30 GMT+2.
The Australian Bureau of Statistics will announce the updated Unemployment Rate and Employment Change data on Thursday, May 19, at 04:30 MT.
The UK Office for National Statistics will publish Consumer Price Index (CPI) data on Wednesday, May 18, at 09:00 MT.
The US Census Bureau will announce Core Retail Sales and Retail Sales on Tuesday, May 17 at 15:30 MT.