Don’t Trust OPEC for Your Binary Trading Direction

Don’t Trust OPEC for Your Binary Trading Direction

OPEC credibility is at an all-time low. On September 28th, OPEC agreed to a production cut, right? “OPEC Agrees to First Oil Output Cut in Eight Years” shouted a headline from Bloomberg.com, and WTI crude oil futures jumped 5% in one day. The very next day, CNBC.com printed the headline “OPEC oil deal is not really a deal, it’s more of an ‘agreement to agree’.” So which one was it?

Crude oil prices continued to rise as it became clear (as clear as these things can be) that it was an agreement to agree to a cap in production, but not necessarily a cut, at the scheduled November meeting with Iran being exempt and Russia’s participation being optional. After a 17.7% rally, the market finally realized that this didn’t mean much and price began to fall almost as quickly as they rose, down to 5.5% lower than where they were at the time of the announcement on September 28th! 

 

As details began to leak in Mid-November about the amount of crude that could be taken off the market if an agreement was actually reached, crude rallied back another 16.5%. Positive comments such as “We are discussing. We are not disagreeing,” by Libyan OPEC governor Mohamed Ounb and “The only problem as of today is (getting) agreements between Saudi Arabia and Iran. (Their) positions have got significantly closer,” by Russian President Vladimir Putin (who also said he saw no obstacles to a global agreement on an oil output freeze) were leaked over a period or a few days. Then, in typical OPEC fashion, the number countries wanting an exemption from any cap or cut grew from just Iran, to Iran, Iraq, Nigeria, Libya and Azerbaijan, pushing prices back below $46.00. This morning, we get comments form Iraq’s oil minister, Jabar Ali al-Luaibi who told the waiting crowd of media that he’s “optimistic” that a deal will be reached on Wednesday and crude is up 2.3%. UGH.

What’s the moral here? Trade limited risk crude oil binary options on Nadex and base your decision off price-action, not OPEC news. Through all of these large moves, price-action trading has given very reliable targets and when it’s been wrong, Nadex Binary options have protected traders from themselves. That’s more than can be said for OPEC.

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