The WTI Crude Oil market initially fell during the trading session on Thursday, but found support underneath to turn around and form a positive candle. The $55 level above has been rather resistive, so I think we need to wait until the jobs number comes out before we can put money to work.
At this point, I believe that a move above the $55 level sends this market looking for the $57.50 level next. Alternately, if we break down below the $54 handle, I then think that the market goes looking towards the $53 level, and then possibly the $50 level after that. Expect a lot of volatility, and of course pay attention to the US dollar, as it can give you an idea as to where the oil market may move as it tends to go in different directions.
The sale and purchase of commodities is usually executed through futures contracts on exchanges that standardize the quantity and minimal satisfactory of the commodity being traded. As an example, the Chicago board of trade stipulates that one wheat agreement is for five,000 bushels and also states what grades of wheat can be used to meet the settlement.
There are sorts of traders that change commodity futures. The first is customers and producers of commodities that use commodity futures contracts for the hedging functions for which they were first meant. Theses buyers truly make or take delivery of the actual commodity while the futures agreement expires. As an example, the wheat farmer that vegetation a crop can hedge towards the hazard of dropping money if the charge of wheat falls before the crop is harvested. The farmer can promote wheat futures contracts while the crop is planted and guarantee a predetermined price for the wheat at the time it’s far harvested.
Theses traders in no way have the desire to make or take transport of the real commodity while the futures agreement expires. Among the futures markets are very liquid and have an excessive degree of each day variety and volatility, making them very tempting markets for intraday buyers. A number of the index futures are utilized by brokerages and portfolio managers to offset threat. Additionally, since commodities do now not generally exchange in tandem with equity and bond markets, some commodities can also be used correctly to diversify a funding portfolio.
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