As one of the most actively traded commodities in the world, the price of crude oil always fluctuates at any time. It is really reasonable that crude oil is one of the main choices for investors in placing their investment coffers.
The price of crude oil also affects many other assets. It is including stocks, bonds, currencies, and even other commodities. For this reason, the investors who are just starting to engage in crude oil trading, it's good to look at several important indicators.
One of the indicators is for sure disaster. The kinds of disasters are so varied. Even a threat or warning of a storm can affect the oil prices. Based on the data, the price had felt during the warnings of the storm. Here is the detail.
Oil Prices after the Storm
Oil edged down in Asian trade although one of two hurricanes threatening the US Gulf of Mexico eased. It is reducing the risk of a prolonged disruption to crude production in the region. It can be good news for traders and global conditions.
WTI is trading around $ 42.50/barrel after rising 0.7% on Monday. Tropical storm Marco faded after safety warning was released. However, the Laura storm has been warned before. About 82% of oil production in the Gulf has been halted. Why they did it?
It is because the operators prepare for the upcoming weather system. Some companies such as Motiva Enterprises LLC and Valero Energy Corp decided to close. It could potentially stop more than 1 million barrels/day of capacity before the storm threat passes.
It means that the price of oils has more possibilities to increase again. You can see the example from the US gasoline price. The US gasoline prices rose to their highest level since before the pandemic on concerns over possible fuel shortages.
Why Disasters Affect Oil Prices
Disasters in this case can be categorized into 2 types. Those are natural disasters and non-natural disasters. The disasters that occur in countries be they producers, consumers, exporters, and importers, of course, have an impact on the balance of demand and supply.
The most warned natural disaster is a major hurricane. This disaster generally results in closure of refineries, flooding of oil wells, closure of ports, and cessation of oil production. The storm could have an impact on global energy flows as well.
It can be diverting gasoline from Europe to the US for example. However, the repercussions are likely to be fleeting. It is because of the coronavirus and how quickly global oil production returns to be the main price drivers in the future.
Prospects for an immediate end to Libya's civil war and a resumption of oil exports are faded. Meanwhile, other conditions can be also done to make the crude oils have the stabile price again in the market. It is highly recommended.
Other Affecting Factors
Apart from the disaster factor, the OPEC+ member meeting also greatly affected world oil prices. The Organization of the Petroleum Exporting Countries and its allies were known as OPEC+ is an organization consisting of 13 OPEC member countries in this universe.
This organization is led by Saudi Arabia and 10 of the world's main non-OPEC exporting countries led by Russia. In total OPEC+ controls more than 50 percent of global oil supply and about 90 percent of world oil reserves. They have an annual meeting.
Meetings between OPEC+ members are usually held twice a year or every six months at the headquarters located in Vienna, Austria. In each meeting, the OPEC+ member countries jointly agree on the amount of oil to be produced and other policies needed.
Those are crucial to overcoming the problems currently being faced by the global oil market. So, whenever OPEC+ holds a meeting either before or after, it will indirectly affect global oil prices. They always make an important decision, especially about crude oil.
