There are many things that affect the price of commodities: global and domestic stability, stock markets, natural disasters, they all can weigh heavily on the prices of things like gold, silver, and oil.
Oil especially has been on a roller coaster for the past two years. In 2014 it hit highs of $115 a barrel, but then dropped to just $26 a barrel in February of 2016, now it is back in the high $40’s.
When you’re investing in anything that’s a natural resource that has to be mined or drilled for, prices are going to be volatile. Oil’s most recently been on the rise because of supply and demand – terrorist attacks on pipelines in Nigeria and wildfires near oil sands in Canada have all contributed to less oil production. The demand side has been driven with more miles driven in the U.S. and organic increases in Asia.
Oil Slides Amid Global Concern
Now though, oil is sliding again over worries that the UK will leave the EU. This is known as the Brexit and will be decided with a June 23rd vote.
The “leave” group is getting more and more support. The “stay” group is fear mongering the change, and markets hate uncertainty.
The Fed’s also waffling as to whether they’ll raise interest rates, causing the markets to teeter. In May, many analysts thought it likely that the Fed would raise rates, but now with a bad jobs report for May, most think interest rates will remain the same, at least for a while. Without any clarity from the Fed, many markets are down, including oil.
Oil has hit its fifth day of falling now, the longest slide since February.
This is not great news for oil companies…. but it could be good news for you.
It’s hard to get a foot in the door in oil investing when barrels are priced at $115, but much easier to get in when it’s less than $50 a barrel.
We now have a range between $50 and $30 a barrel. Any drop under $40 will be your last chance to buy.
To continue reading more about oil prices, click here.