Have you ever wondered how traders know when to buy or sell crude Oil derivatives and what moves Oil prices?
If you’ve ever asked yourself how to analyze Oil prices, you’re in for a treat with this blog post because we’re going to demystify one of the main factors which move the Oil price.
Reports by globally recognised authorities are used by most traders to analyze prices.
There are three main Oil market reports to watch.
Let’s start with the first-read oil price report for any crude Oil trader – the US Energy Information Administration.
At the end of every week, the EIA releases statistics about crude Oil inventories in the USA. The report is called The Summary of Weekly Petroleum Data.
This critically important report covers refinery inputs, refinery operating capacity, gasoline production, and average US crude Oil imports. Most importantly, the report gives crude Oil inventories (stocks) plus or minus, and the relative five-year average. It’s a key insight into seasonal demand for Oil.
How do traders use this report?
If inventories are rising, it means the supply of crude Oil is increasing. This often means that demand is falling and traders may decide to sell off their Oil contracts before the price falls too much.
The report doesn’t cover actual prices but the markets use it to estimate supply and demand, which means they make global oil demand forecasts on a weekly basis.
The second source of vital market information in the crude Oil markets is OPEC. If you ask the question ‘who controls or decides Oil prices’, you don’t need to look much further than the influential OPEC cartel.
Every month, OPEC publishes an in-depth report of major factors driving Oil prices. It includes a comprehensive analysis of global Oil price benchmarks like ICE Brent and NYMEX WTI.
From a wider perspective, OPEC also analyses the world economy, world Oil demand and world Oil supply. This is a 97-page report but well worth reading for all serious Oil traders.
Last but not least, the World Bank is a great source of information for Oil traders. The banking organisation focuses on global prices and every month it releases the Commodity Markets Outlook report.
This publication covers crude Oil and many more commodities and gives a big-picture overview of price movements and expectations.
Oil current events
The reports we talked about can be the foundation of Oil trading strategy but the influence of current events in the Oil markets must not be ignored. These are usually geopolitical events or sudden changes in economic circumstances like in Venezuela, for example. Still, keeping updated with OPEC, the EIA and the World Bank Oil reports is the best way to stay connected with Oil price movements and use the information to make educated trades.