ebf301_ff6_fon5018 - FatinNorAzizi CrudeOilScenarios...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Fatin Nor Azizi Lesson 6 ­ 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 of Wednesday night, at least 23 tornadoes have been confirmed from National Weather Service surveys from Texas to the Gulf Coast states, Carolinas and Virginia. Severe thunderstorm wind damage has also been reported in parts of the Northeast. At least six tornadoes have been rated EF2 or stronger, including a pair of deadly tornadoes that hit Lamar County, Mississippi, and near Convent, Louisiana, on Tuesday. The National Weather Service has also found at least EF3 damage from a tornado that hit near Pensacola, Florida, Tuesday evening. These extreme weather conditions can physically affect production facilities and infrastructure disrupting the supply of oil and induce price spiking. Source: eb23­24­2016 2. Domestic Economy ­ Bullish GDP growth over all of 2016 will be 2.5%, up slightly from 2.4% in 2015. Consumer spending, which makes up more than two­thirds of U.S. GDP, will be the main engine of growth. The housing market will continue to strengthen, too, courtesy of pent­up demand and an increase in household formations. Moreover, many buyers will rush to beat coming increases in mortgage rates. Business investment will also show a pickup, though new investment in the energy sector will be modest. As the GDP is growing so does consumers spending. This indicates that there will more use of energy and transportation, hence, the price rising for crude oil. Source: cast.html 3. Global Economy ­ Bullish Saudi Arabia and Russia, the world’s two largest oil exporters, finally reached an ag reement on Tuesday to raise the price of oil, committing with Qatar and Venezuela to cap future production at January levels. Rather than cutting production below current levels, Riyadh and Moscow offered to hold production more or less steady because they are each pumping oil at near­record levels. When supply is on hold as the demand keeps growing, this will decrease the supply eventually, hence rising the price of crude oil in the market.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fatin Nor Azizi Lesson 6 ­ Fundamental Factor Source: ;
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern