Learn why the Oil Prices Set to Fall

Published: 3 June, 2013 13:12

Drilling for oilThe buzz from trading analysts is that world oil prices are set to fall thanks to oversupply caused by North American shales, excess inventory and a failure by the Organization of Petroleum Exporting Countries (OPEC) to cut production at its meeting last week.

Although the large, frackable oil deposit finds in Canada and the United States have met with both transportation difficulties and environmentalist opposition, they still raise fears of a coming glut in the world oil market. Meanwhile, the United States, consumer of a healthy percentage of the world’s petroleum products, already has an excess of oil inventory.

OPEC is rumoured to have had a spirited meeting at which it decided to keep oil production at its current level of 30 million barrels per day, fearing that a cut in production would hamper economic recoveries worldwide. In reaction, the price of brent crude dropped to £67 a barrel by the close of Friday’s trading.

With crude prices feared to drop below the magic £65.68 (USD $100) mark in the near future, online commodity traders should look either to short sell oil or to go long on precious metals. Gold is a good bet, but the star the of current precious metals markets is copper, which is once again enjoying record high prices and looks to keep going up.

Online commodity traders can look to make significant gains going long on copper because of its comparatively low price and positive outlook for the near and mid-term future. Copper futures look particularly attractive right now.

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