OPEC's [+/- 34% of global crude production] 12 member countries fail to reach an agreement on production levels. Interestingly whilst Iraq & Iran warned on an oil-price collapse, the Saudis voted for an increase in production. Nevertheless, oil futures spiked on the usual expectations that the northern hemisphere's seasonal (summer) demand would drive prices higher.
The FED Chairman, Bernanke, expects a global economic recovery in the second half of this year. The prediction, to some extent, depends on a decline in the price of oil..
So your broker calls you up and recommends a trade: 'Buy 'KSA Oil (fictitious)', the P/E is historically low....' Typically you'll ponder the usual problems: Do I 'do nothing'? Do I buy? What do I buy? When do I buy? Considering OPEC's impasse and Bernanke's prediction of lower prices, what do you do? *
Like an onion the financial markets are complex and multi-layered. Occasionally the trade is less obvious than it seems.
Understanding onions is a skill. Use a sharp knife or you'll cry....
*pro-traders would buy volatility, not oil nor 'KSA Oil' (fictitious).
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