Week 11: OPEC

News

Week 11

OPEC

OPEC’S EFFORTS TO PROP UP THE MARKET TO GAIN MOMENTUM IN THE 2ND HALF OF 2017

Crude oil prices have stabilised after languishing in response to the sudden influx in supply, however with OPEC now setting a production ceiling, oil-related exchange traded funds (ETF’s) may soon find themselves on a much better footing. Crude oil prices are still a shadow of what they once were, which leaves a lot of upside potential and now, with the oil cartel stepping into stabilise
prices, crude oil may have further room to run.

Announcements by OPEC during the first quarter of 2017 and the concerted effort to show to the markets that they are fully committed to hitting the targets they set last November are expected to converge through 2017 to see oil prices trend higher. However, as the market adjusts to the new paradigm, we may continue to experience bouts of volatility along the way before seeing
prices continue to improve toward the latter half of this year.

At the moment, we have the Saudi announcements working to prop up the market but expect to see an increasing frequency of real adjustments in supply through the rest of 2017.

A convenient way for investors to access the energy markets are ETF’s and there is a wide choice of options to tactically or strategically position their investment portfolios conveniently and at a low cost. For targeted market exposure, the ‘United States Oil Fund’ tracks West Texas Intermediate crude oil futures and the ‘United States Brent Oil Fund’ tracks Brent crude oil futures.

Additionally, the ‘United States Natural Gas Fund’ allows investors to track the price movements of the natural gas market. For those investors looking to gain broad exposure to the commodities market take a look at an ETF like the ‘United States Commodity Index Fund’.