Oil is currently trading at its lowest level in 7 years as oil supply helped by the shale industry in the United States far outweighs oil demand weakened by the slowing global economic growth. If you add the increasing competition from renewable energies such as solar power or natural gas, you can easily understand why oil is down almost 70% from its 2014 levels. While oil was once an asset available only to institutional traders, the democratization of online trading and retail financial instruments has made it possible for retail traders to invest in oil pretty easily. Nevertheless, one must not forget that trading oil using binary options is different from trading futures or CFD on oil. It involves the implementation of short-term trading strategies using the leverage of binary options in order to benefit from small moves in the commodity price.
Oil is trading at 34.75 USD – lowest level since 20199
WTI oil, which is the benchmark for the price of oil produced in the United States, is currently trading at its lowest level since 2009. The price of the WTI crude oil just retested 34.75 US dollar, which is only 22 cents above the lowest level of the year that was seen on Monday December 14th. The current level could mark what technical analyst call a double bottom. If the price of the commodity bounces at this level, it could quickly jump to 36 or higher. If oil breaks this level however, be ready to enter a short position as new lower prices for the year tend to trigger further downward pressure on a commodity as closely followed by worldwide traders as oil.
Is it the right time to buy a binary option on oil?
Like equity stock prices, oil prices are impacted by a large number of fundamental and technical factors. The fundamental factors include geopolitical tensions, the production quotas announcements by the Organization of Petroleum Exporting Countries (OPEC), GDP figures … While it is extremely difficult to determine the fundamental fair value of oil considering the huge number of factors to take into account, we believe that the risk-reward of buying a binary option on oil looks interesting at the current levels. Such depressed level of oil is not sustainable for many oil producing companies and countries and we would not be surprised to see them cut the production.
Depending on the maturity, binary options on oil can generate up to 85% returns. Among the brokers that offer binary options on oil, Interactive Option and 24option are the ones that propose the largest range of different maturities. So depending on your market scenario, you can decide to buy a 1week binary option or a one month binary option. These two brokers are fully regulated and will help you with your first trades if you are a beginner. Don’t hesitate to have a look at our detailed review of Interactive Option and 24option and use our secured links to benefit from additional privileges.