More than 50% of all rigs searching for oil domestically have been shut down. This has helped to support oil prices, but the fact that prices have not surged quicker suggests the downward bias in the commodity and the continued fear of oversupply and lower demand.
The near-term direction of oil prices will largely be driven by supply and demand data, along with the situation with ISIS and Iran. Whether you are trading from the short or long side, it will continue to be a trader’s market, so look to snap up profits after moves.
Any major weakness in oil prices should be viewed as a long trade, while surges should be met by profit-taking or on the short end. You can also play this trade via call and put options.
This article is brought to you courtesy of George Leong.