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The Main Economic Events that Impact Oil’s Prices

While not many assets often enjoy being in the spotlight, there is one commodity in particular, that seems to be shining brighter than most. Oil has been bending over backwards to catch investors’ attention, mostly every day of the week. Keep on reading to find out how it does it.

That economic events have a certain recurrency, shouldn’t be a surprise to any trader that ever checked an economic calendar. So, in this post we’ll discuss the most interesting events that push Oil’s prices up or down, to understand why exactly they matter so much. 

As we saw in the ‘What goes around, comes around’ post, the main events to impact Oil’s prices on a weekly basis are:

  • Tuesday – American Petroleum Institute – API (US),
  • Wednesday – Energy Information Administration – EIA (US),
  • Thursday – Organization of the Petroleum Exporting Countries – OPEC and OPEC+ Meetings,
  • FridayBaker Hughes US Rig Count.

Before we can go further and discuss the other events that tend to impact Oil’s trend, first let’s take a look at what the gist is with the above recurring events. 

 

Why follow these events?

To start with, you should know that the American Petroleum Institute (API) is an independent US institution that is accountable for ‘more than 600 members that produce, process and distribute most of the nation’s energy’. 

Following the research they conduct, API creates statistics on a weekly basis that culminate in every Tuesday’s Report on the state of the Oil production within the continent’s borders. And that’s not all they do. Instead, the API also evaluates all the aspects of the Oil industry’s operations. 

However, their reports don’t represent the official US Government’s stand on the matter. In fact the state publishes its own conclusions through the analysis conducted by the Energy Information Administration (EIA). 

The organisation is one of the main agencies of the US’ Federal System, part of the Department of Energy. They cover data about all the energy industry, starting with coal, Oil, natural gas, electric, renewable and nuclear energy

Although it works in the service of the state, its services are provided independently of any political influence. The agency doesn’t formulate nor advocate any policy conclusion. 

 

Two similar events, yet different results

So while the API prepares an overview of the Oil production, this can only be confirmed, or by the case infirmed by the official EIA report from each Wednesday. Often, the two showcase similar conditions, with the difference that the EIA is more accurate, having access to all the official data.

As an Oil or energy trader, you can expect to see these two reports recurring every week, on the same day, exception making only the moments when there is a Public holiday, that will simply push the publication by one day, or even two. 

According to a report published at the beginning of this week by the EIA, from more than 100 Oil producing countries, five of them managed to produce almost half of the globe’s total Oil production (2019):

15%

United States

13%

Russia          

12%

Saudi Arabia

6% 

Iraq             

5%

Canada      

Who oversees the rest of the Oil producing countries?

From the Asian continent, come information regarding two of the major players from the big Oil league. Saudi Arabia is one of the founders of the Organisation of Petroleum Exporting Countries, along with Iran, Iraq, Kuwait, and Venezuela. 

The Organisation includes 10 other Oil producing countries (Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Libya, Nigeria, Qatar, Republic of the Congo, Saudi Arabia and the United Arab Emirates). At date, OPEC is accountable for 44% of the entire global Crude Oil production –  with more than 80% of the reserves, and 21% of the Natural Gas produced – owning about 50% of the reserves.

The second magnet country – Russia, although not a part of OPEC, is included in the OPEC+ consortium, along with 9 other countries (Oman, Azerbaijan, Mexico, Malaysia, Bahrain, Sudan, S Sudan, Kazakstan and Brunei). The country owns less than 5% of the total oil reserves but consumes just about 60% of it. 

OPEC and OPEC+ make most of their decisions over weekly meetings or Vertices, in order to agree on how to best counter the fluctuations from Oil’s prices. Currently, they’re supposed to agree on a date to settle for a new agreement to cap the Oil production and help elevate prices, together with Russia and possibly the US. 

Also on a Monthly (or Bi-Monthly from case to case) basis, OPEC publishes a detailed country report, the last day of the month. We have further discussed the impact of this event in the ‘WTI Oil – Market Analysispost. OPEC’s detailed report happened to be published this Tuesday, making the entire week about Oil’s prices. 

 

There’s more to Oil than meets the eye

You should also keep in mind that aside from the above, there are other events that impact the Oil, although these aren’t found in the economic calendar. Even if only experienced traders constantly check them, know that they’re extremely easy to follow and understand. Continue reading to get why: 

  • export and import – based on the value of taxes and the overall cost, they can impact prices negatively or positively
  • interest rates – increasing or decreasing can affect the value of the currency, thus rendering Oil more or less expensive, and influencing the purchasing power
  • production, transportation and storage – like the above parameters, their costs inflict on the price of Oil;
  • Politics – deciding whether or not to purchase, from where, how much, for what period etc; 
  • consumer countries’ economies – by their power of acquisition, they can consume more or less Oil;
  • natural disasters or weather conditions – since these can influence all the above we’ll further discuss them in an upcoming post

 

We hope this blog managed to shed some light on how to follow Oil’s most important events, properly prepare before initiating a transaction, and understand what exactly influenced Oil’s prices in a particular moment in time. 

There’s more from where this blog post came from, so make sure to read on!

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage

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