Oil Continues Its Wild Ride As OPEC Deal Continues To Concern

A couple of months ago, oil was the talk of the town as something unthinkable happened. OPEC seemed to have penned an agreement that would lead to a slight reduction in the production of oil. However as time has passed, the hopes of this deal coming to fruition have all but fizzled away. Today, we'll talk about the big issue with the OPEC deal, why it's leading oil down a very volatile path, and what binary options traders should be watching when trading the commodity ahead.

What's Going On With The OPEC Deal

For those of you who haven't been following the story, a couple of months ago, OPEC let the world know that it had reached an agreement to slightly cut production among OPEC members. However, when the agreement was reached, there were big concerns as to how it would work. At this point, no one knew what countries would be producing what volumes of oil in order to reach the overall goal of a cut. In fact, many, including myself, questioned whether the deal would actually be achieved.

As time passes, we're seeing more and more that those who were questioning the deal were right to do so. Recently, we've seen several non-OPEC nations state that they would not be taking part in the deal. This of course, puts pressure on OPEC with regard to rallying the troops in the cartel to move forward anyway, reducing the chances of the agreement ever being finalized. Now, things have gone from bad to worse.

The big news that's taking center stage at the moment surrounds Iran. In the past, Iran has said that the only way it would agree to the deal was if the country's production was capped at 4 million barrels per day or more. However, the current deal proposes a cap on Iranian oil production at 3.92 million barrels per day. While that may not seem like a far stretch to make, on the bottom line side, that's a big difference. In fact, at $45 per barrel, this slight reduction would mean about $3.6 million less in potential daily revenue from oil production.

Why This Is Such Big News For Oil

At the end of the day, oil, like any other commodity, has a price that's largely dictated by the law of supply and demand. Because of the fact that demand for oil hasn't been nearly as strong as the production of the commodity over the past few years, the price of oil is in the midst of a crisis. With the deal coming to the table, the price of the commodity started to head upward as it seemed as though we would see a balance of supply and demand in the near future. However, as the deal becomes more and more of a strain to finalize, oil heads down a volatile path riddled with uncertainty.

What Binary Options Traders Should Be Watching Ahead

Moving forward, price movements in oil will likely be largely dictated by progress on the OPEC deal. If things continue to become more and more concerning and the likelihood of the deal falling through the cracks becomes even larger, more declines are likely to be seen in the price of the commodity. Adversely, if ongoing meetings surrounding the OPEC deal turn out positive results, we could watch as the price of oil heads on a strong upward run. However, at the moment, the commodity's price is likely to remain volatile and will likely continue with wild movements based on the news for that day. So, binary options traders should keep a close eye on the OPEC deal news as well as up to date supply and demand information to get an idea of where the profits lie with oil.