Oil Prices on a Rally

Roughly three million barrels of oil every day pass through the Suez Canal, controlled by Egypt. When Egyptian citizens began protesting for government change, a domino effect began in the Middle East. When Libya, which has the largest oil reserves in Africa, made the news with stories of civil rebellion and violence, uncertainty about oil supply rose even further. The situation in Libya to date, as of Feb 22 2011, has spiraled out of control, leading Brent Crude to approach $110 a barrel. Demonstrations have started in Yemen, Jordan, Syria and Lebanon. Throughout the Middle East, North Africa and oil-producing countries in the Arabian Gulf we are hearing of political unrest. Transportation companies, in an interest to secure the uncertainty of supply, have fed an oil futures rally. Combining transportation companies influences on the oil futures rally with trader responses to the news events, and we see the causes of the current bullish movements of oil futures.

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One of the most profitably ways of trading market events, such as news event of political unrest in the Middle East and North Africa, is the use of Binary Options. Purchasing a Binary Option on crude oil futures, for example, means that a trader is choosing the direction the crude oil future will close at (higher or lower) than a current price. At expiry time, if the trader predicted the direction correctly, the trader will enjoy profits of around 85%. In a rally event such as seen with the current crude oil futures situation, it is an obvious fit to trade this, and similar events, using Binary Options involve no leverage and the trader is only choosing the closing direction.

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