19 October 2014

Crude Oil rebound from Two Year Low - Oct 2014

This is just to record that crude oil rebounded from its two year low of USD80 to current USD82++. Frankly speaking, I do not really know the real reasons behind but the main idea was that the supply is more than demand currently. Few points here:
  • Shale oil from US hit record production thanks to the latest technology that can extract the oil out from rocks which could not be done previously.
  • Increase in USD helped lower down the crude oil price as it is normally negative correlated with USD movement.
  • Rumor saying that US was trying to revenge Russia which is one of the major exporters in Oil and Gas sector. 
It shows that if we invest in commodities like investment, we could not foresee the price trend or the long term profitability of the counters. We have to also keep track the commodities market that affected by various factors - wars, politics, economy, technology etc. It may make us more difficult in forecasting the future free cash flow of the companies in commodities sector. 

So it is always good to learn more about the factors that affecting the price movement of commodities before we invest in it.  

3 comments:

  1. Abstract or extract? Haha..

    ReplyDelete
    Replies
    1. Tq for your point out. I have made correction on it.

      Delete
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