In barely a year, the price of crude oil has effectively collapsed and investors across the spectrum were taken by surprise. A new giant has arisen in the oil trading arena.
Massive Profits Generated in Oil Storage!
When the oil price went into freefall few people could have anticipated the extent of the carnage. Investment banks and institutional investors were caught unawares with what happened. At that stage of the game, there was little agreement as to how much further oil prices could fall. Given what has been taking place in the commodities trading arena, big changes are afoot. Binary option traders and various investment banks have generated huge profits in recent months. For investors, the money that was generated by storing and trading physical commodities was tremendous.
Morgan Stanley Exits Oil
The recent slowdown in China, followed by the precipitous decline in commodity prices resulted in rapidly falling profits. For these reasons, it is clear that the Crude oil market is not the booming industry that it once used to be. Recently, the investment giant Morgan Stanley made plans to sell off its oil business to Castleton Commodities International. This has given CCI blue chip status in the commodities trading arena. Prior to the deal, it was Morgan Stanley that was the most established oil business on Wall Street. Despite the fact that Morgan Stanley is not deeply impacted by the deal, there is clear evidence to suggest that the world of commodities trading is changing rapidly.
Falling prices have impacted heavily on investments in the commodities markets. Many companies are now steering well clear of commodities on the whole. More and more of the big companies are now staying away from commodities trading, but this has paved the way for companies like Castleton Commodities International to become one of the major players in the industry. Of equal importance is the fact that analytical data on commodities trading is now more difficult to come by. Since so many of the analysts that conducted their research are no longer physically involved in commodities trading, there is room for new players to enter the market.
New Opportunities for Investment in Commodities Sector
With the shuttering of divisions of big commodity investment companies, new opportunities are being presented for investment in infrastructure. With the departure of Phibro and Morgan Stanley, funding for infrastructure development will become scarcer. This scarcity will provide ample opportunity for big profits from companies providing capital. Some of the many companies providing capital for investment in infrastructure include Apollo and Blackstone. Binary option investors are eying the energy infrastructure investment arena for signs of an uptick in coming weeks. There is no doubt that as banks exit this space; new investors will enter seeking big profits. Investing in commodities infrastructure is one of the most important sectors of an economy and tremendous profits await investors in this arena.
What Now for Oil Drilling?
Investment giant Goldman Sachs has been pessimistic about U.S. oil producers re-entering the market now that the oil price has increased over $60 per barrel. What is likely closer to the truth is that U.S. oil companies will start entering the market when the price of WTI Crude and Brent Crude approaches $70 per barrel or more. And that will likely be insufficient to get oil production pumping at full capacity. While production of oil has flattened out, and will drop off, oil inventories are also falling at this time.
At this time, the rig count remains unchanged. As the number of operational wells continues to decrease so the supply of oil will decline too. This will then assist in further driving up prices. It is possible that the price will stabilize in the $70 – $80 range, making it uncomfortable for consumers in the U.S. Prices will be unlikely to hold if oil wells increase their production when prices rise. By the middle of 2016, it is possible that cheap oil will no longer hold and prices will rise. If oil prices are going to rise, falling inventories and fewer oil wells in operation must come to pass. What is clear is that global oversupply has deteriorated and demand is generally weak. Market movements do not appear to be based on fundamentals, but they will win out in the end!