Growing Geopolitical Tensions Dictate Oil Direction
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(eToro Blog) Crude oil prices edged higher as escalating geopolitical tensions in the Middle East trump a slump in global demand. This time around, Syria and Turkey are at the center of the conflict, with the 18-month old tensions fueling concerns that dissention might spread into other nearby countries. On Monday, the Turkish president confirmed that their worst case scenario seems to now be unfolding, with Turkey’s military presence growing along the border to Syria.
Analysts believe that the conflict could threaten production and distribution of Brent crude oil in the areas north of Iraq. As a result crude oil prices have trended higher; London-traded Brent crude is now trading at $112.52 a barrel, a gain of $0.70, while NYMEX traded West Texas Intermediate is currently trading at $90.01, a gain of $0.68.
On the demand side of the oil equation, the IMF lowered its global growth forecasts yet again, the second time in only six months, and warned that failure by the Eurozone and U.S. policymakers is likely to only exacerbate the slowdown. According to the IMF report global output is likely to grow at only 3.3% this year, down from the 3.5% estimated in July. Economic growth in China is forecast to slow to 7.8% in 2012 down from 9.2% last year and again the IMF said that it will be incumbent upon the U.S. and Europe to ensure that their economic situation doesn’t worsen and impact the rest of the world’s economies.
On OpenBook, oil sentiment is overwhelmingly bullish with 91% of traders buying against 9% selling. OpenBook trader Laurentmartel from France earned 22% on a long position earlier, and has another long position now approaching breakeven. The trader’s 11.77% allocation in oil has gained 11.9% over the last month; his realized equity for the same period was 33.8% and for last week was 25.9%. Though relatively new to OpenBook having begun trading only in August, the trader already has already caught the attention of his peers and now has 11 followers and 6 copiers.
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