{"id":145703,"date":"2018-10-25T11:52:35","date_gmt":"2018-10-25T00:52:35","guid":{"rendered":"https:\/\/www.gomarketingteam.com\/auarticles\/oil-can-basic-economics-be-responsible-for-an-11-decline\/"},"modified":"2021-04-14T15:06:45","modified_gmt":"2021-04-14T05:06:45","slug":"oil-can-basic-economics-be-responsible-for-an-11-decline","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/articles\/oil-metals-commodities\/oil-can-basic-economics-be-responsible-for-an-11-decline\/","title":{"rendered":"Oil \u2013 Can Basic Economics Be Responsible For An 11% Decline?"},"content":{"rendered":"<h2><a href=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/shutterstock_348488006.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-79971 size-large\" title=\"oil stockpiles\" src=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/shutterstock_348488006-1024x536.jpg\" alt=\"oil stockpiles\" width=\"1024\" height=\"536\" srcset=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/shutterstock_348488006-1024x536.jpg 1024w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/shutterstock_348488006-300x157.jpg 300w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/shutterstock_348488006-768x402.jpg 768w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/shutterstock_348488006-600x314.jpg 600w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/shutterstock_348488006.jpg 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/h2>\n<p>On the back of what has been a pretty punishing month for Oil, now trading below $70 a barrel for WTI crude, we\u2019re going to take a look at Oil, the fundamental drivers behind the price swings and what the future could hold for the Oil markets. For the sake of clarity, this article will be looking exclusively at WTI Crude.<\/p>\n<p>So what drove the close to 11% decline in Oil? What has stalled fund managers and market voices calling for oil to revisit $100 a barrel? Well, mostly it is a confluence of reasons, some rooted in basic economics and one fear-based reaction on the back of the \u201cstock market rout\u201d as it has been dubbed. Now although we are going to be focusing on some of the reasons for this decline, these are not specific to this sell-off alone, these are fundamental drivers in the price of Oil markets.<\/p>\n<p><a href=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-79973 size-large\" title=\"wti crude futures\" src=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart1-1024x512.png\" alt=\"wti crude futures\" width=\"1024\" height=\"512\" srcset=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart1-1024x512.png 1024w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart1-300x150.png 300w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart1-768x384.png 768w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart1-600x300.png 600w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart1.png 1378w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><em>WTI Crude December Contract &#8211; October sell of from $76.72 to low of $68.53<\/em><\/p>\n<p>One of the reasons for the sell-off is that of a supply jump. U.S. crude stockpiles rose by 22.3 million barrels, which is the most substantial increase since 2015. This factor comes down to basic economics. With a boost in supply and the more something is readily available; naturally, the associated value will be lower, and this is what is weighing here.<\/p>\n<p>However, the story doesn&#8217;t end there. It can also provide an insight into how the general populous is leaning as an increase in stockpiles means that the current supply level is too much for current demand. For example, it could potentially be an indicator in sentiment, companies shifting to renewables, and more and more people moving to electric vehicles, etc. All of these factors would impact the appetite for oil which then leads to an oversupply, subsequently causing a tumble in price as we&#8217;ve seen of late.<\/p>\n<p>One of the other factors for Crude also stems from this balancing act of supply and demand. With Crude spiking to highs not long seen, it sparked some fear that the high prices would weigh on demand for the asset, causing investors to be more cautious and to close out long positions. Since then both OPEC and the International Energy Agency have both revised down the oil growth forecasts.<\/p>\n<p><a href=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart-2.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-79972\" src=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart-2-1024x511.png\" alt=\"\" width=\"1024\" height=\"511\" srcset=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart-2-1024x511.png 1024w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart-2-300x150.png 300w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart-2-768x383.png 768w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart-2-600x300.png 600w, https:\/\/www.gomarkets.com\/wp-content\/uploads\/2018\/10\/oilchart-2.png 1380w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><em>WTI December Contract and S&amp;P Overlay &#8211; During the &#8220;stock rout&#8221;<\/em><\/p>\n<p>The so-called \u201cstock market rout\u201d also took its toll on the Oil price, with investors dumping risk assets and moving into safe-haven assets, i.e., bonds, gold, etc. this helped to perpetuate Crude\u2019s slide and saw it shed a further 5% of its value.<\/p>\n<p>So, with WTI Crude oil currently, at the time or writing sitting at lows of $66.70 a barrel, what lies ahead for Oil? With continued sell-offs seen in equities markets and steadily more risk-off sentiment throughout the market, we could continue to see Oil slide. However, as markets tend to jump between risk-on &amp; risk-off on a daily, sometimes more frequent basis, we can expect to see plenty of activity in the Oil market, and this will undoubtedly be one of our watchlist staples.<\/p>\n<p>For more information or any questions feel free to reach out to me on twitter<\/p>\n<p><strong><\/strong><\/p>\n<p>This article is written by a Wixad Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives, including <a href=\"\/oil-commodity-trading\/\">Oil Commodity trading<\/a>, carries a high level of risk.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On the back of what has been a pretty punishing month for Oil, now trading below $70 a barrel for WTI crude, we\u2019re going to take a look at Oil, the fundamental drivers behind the price swings and what the future could hold for the Oil markets. For the sake of clarity, this article will [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2875],"tags":[],"class_list":["post-145703","post","type-post","status-publish","format-standard","hentry","category-oil-metals-commodities"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Oil \u2013 Can Basic Economics Be Responsible For An 11% Decline? - Wixad<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.gomarkets.com\/en\/articles\/oil-metals-commodities\/oil-can-basic-economics-be-responsible-for-an-11-decline\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Oil \u2013 Can Basic Economics Be Responsible For An 11% Decline? - Wixad\" \/>\n<meta property=\"og:description\" content=\"On the back of what has been a pretty punishing month for Oil, now trading below $70 a barrel for WTI crude, we\u2019re going to take a look at Oil, the fundamental drivers behind the price swings and what the future could hold for the Oil markets. 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For the sake of clarity, this article will ","link":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/preview-bank-of-england-rate-decision\/","type":"next","category":"central-banks"},"previous":{"id":145702,"slug":"gold-making-waves-where-will-price-settle","title":"Gold Making Waves - Where Will Price Settle?","date":"2018-10-24 17:10:16","excerpt":"On the back of what has been a pretty punishing month for Oil, now trading below $70 a barrel for WTI crude, we\u2019re going to take a look at Oil, the fundamental drivers behind the price swings and what the future could hold for the Oil markets. For the sake of clarity, this article will ","link":"https:\/\/www.gomarkets.com\/en\/articles\/oil-metals-commodities\/gold-making-waves-where-will-price-settle\/","type":"previous","category":"oil-metals-commodities"},"category":{"slug":"oil-metals-commodities"},"_links":{"self":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/145703","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/comments?post=145703"}],"version-history":[{"count":0,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/145703\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/media?parent=145703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/categories?post=145703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/tags?post=145703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}