Oil investments remain strong despite global downturn

Despite the facts that pessimistic economic data has flooded the commodities market from every corner of the globe and several prolific nations are rallying in order to prevent a second recession from hitting the developed world, crude oil futures and oil investments continue to hold their increasingly shaky ground. Brent crude oil prices, the recognized European benchmark are holding strong above the $100 threshold, and showing no signs of dipping below for the time being. Experienced investors have to be wondering what propels the commodity oil to remain so stable after displaying a year’s worth of high volatility on the commodity index. After all, crude oil futures hit a year low level less than a month ago, bringing oil investments to a standstill.

Though prices rallied majorly late last week after Europe’s summit, they tapered off somewhat once the first dust settled, as traders expressed doubts over the longevity and viability of the region’s debt resolution strategies. Japan’s industrial woes also negatively affected the commodities market.

U.S. crude oil prices settled at $93.32 per barrel in New York by the end of the trading session, down 64 cents. Brent crude oil futures lost a considerable $2.17 per barrel to settle at $109.91 per barrel in London. The commodity futures were supported by an optimistic economic outlook in the U.S. Less than a week before this, crude oil prices hit their highest marks in more than three months on the strength of China’s massive expansion plans.

Yet overall, the state of health of global economy remains highly unfavourable for a prolonged bull run for oil investments. Libya is currently readying its full-scale return to the sector, while the production rates in Iraq are soaring at an alarming pace.

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Nevertheless, Brent crude oil futures have been confidently holding above $100, going as far as circling the $110 mark. Such resilience does not make logical sense, since no amount of positive news from separate sources can make up for the fact that the world as a whole is teetering on the verge of another recession.

The oil commodity futures and oil investments have been bolstered by the fact that several key suppliers of OPEC are out of play due to political unrest. Unusually low stockpile reports from the U.S. have also propelled crude oil up the charts.

The oil commodity seems to be at a crossroads given the fact that it is still rather unclear how effective Europe’s debt resolution measures will prove to be. With both U.S. and Brent crude oil prices still unable to comfortably breach points of resistance on the commodity index, it is clear enough that victory is far too early to declare for the commodity oil.