Oil has always been one of those preferred commodities for the investors which have been giving profits since long. The current trend seems very positive for the oil investors as oil has been making a good upward move and raising the profits for the investors. The good news has continued and oil recently traded at almost the highest price of the four months which came along the longest winning streak as a continuation from the month of August. The major reasons for this long breakthrough is Saudi Arabia cutting its oil output and the investors making speculations that economic recovery working to boost the fuel demand.

Futures showed a slight change in the New York when the prices rose for the first time in the recent three days. It is a well-known fact that Saudi Arabia is the largest crude exporter in the world and any kind of ups and downs with the country significantly affects the demand and supply and ultimately the prices of the crude oil. In the present days, Saudi Arabia has reduced its output compared to the data of the last 19 months which hiked the speculation of price rise. Moreover, China has accelerated its exports and the president of European Central Bank verged that the euro-area economy will soon revive. Onto this, Japan announced a 10.3 trillion yen stimulus package which also poised oil for the current price gain.

Both experts and investors have perceived that because Saudi Arabia has held back on the supply of oil, the prices of the commodity has gone up. An expert also claims “If investors get behind the global recovery, then I think it can break through $95 a barrel”.

The production in Saudi Arabia had come down by 4.9 percent to 9.025 million barrels a day last month anticipating the booming US output and improving consignments from Iraq threatening to oversupply the global oil market. The current production cut of 465,000 barrel is supposed to be the largest monthly drop since the November 2008 when the OPEC (Organization of Petroleum Exporting Countries) had cut supplies due to the expected global recession.

The high expectations of economic recovery in the New York can make oil prices go up. Similarly, Japan’s stimulus package is expected to increase GDP by 2 percentage points and generate 600,000 jobs which means investors may get interested for the trade. China’s exports soared by 14 percent last month which will also encourage the oil investors.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.