ebf301_ff7_fon5018 - FatinNorAzizi CrudeOilScenarios...

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Fatin Nor Azizi Lesson 7 ­ Fundamental Factor Crude Oil Scenarios Determine whether each scenario could have “bearish” (lower prices), “bullish” (raise prices), or neutral impact on the commodity prices. 1. Weather ­ Bullish As spring approaches, there is less snow and snowstorms in the US. So, people are travelling by motor vehicle more as summer is coming pretty soon as well. This will boost the expectations of fuel demand. This results in a high usage of crude oil due to high energy required to fuel vehicles to move around during the higher temperatures season. Source: https://weather.com/storms/winter/news/january­march­outlook­2016­noaa­wsi 2. Domestic Economy ­ Bullish U.S. sugar production for 2015/16 is projected to be 8.827 million STRV, a 22,000­STRV decline from the previous month’s projection. As a result of a higher production of sugar, the additional time is required to produce the cane, recovery rates of the soil plantation are expected to be lower than previously anticipated. Due to an increase of production, crude oil usage will increase due to the fact of transportation and deliveries. Hence, price will go up. Source: http://www.ers.usda.gov/media/2030300/sss­m­331­mar2016­final.pdf 3. Global Economy ­ Bearish The U.S. and global economies will grow at a slower pace this year than initially estimated, requiring an "urgent" response from policymakers. They said recent financial market volatility and debt in emerging markets increased the risks to global growth. U.S. economic growth will slow this year to 2%, down from 2.4% last year. All these affect the crude oil price which is predicted to decrease while the economy slows down. Source: http://www.latimes.com/business/la­fi­global­economy­oecd­20160218­story.html 4. Currency ­ Bearish Crude Oil jumped to its highest percentage rise since the move from the August low with
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