Article: WTI oil futures rose in price during Asian trading
Source: https://ru.investing.com/news/commodities-news/article-2291529
Context:
On the New York Mercantile Exchange WTI oil futures for October delivery are trading at $88.86 per barrel, having risen by 0.38% at the time of writing this comment.
The maximum of the session was the $per barrel mark. At the time of writing WTI oil found support at $86.15 and resistance — at $89.64
, futures for the USD index, showing the ratio of the US dollar to a basket of six major currencies, fell by 0.13% and is trading at $104.26.
What is meant - in simple words.
As we know futures is a speculative transaction between a buyer and a seller for the purchase and sale of an asset. In this case, oil is acting.
The futures seller offers to buy it to the buyer in October at $ 88.86 per barrel, although at the current time the exchange (spot) price for it is $88.52 per barrel (0.38% lower). That is, futures sellers see (predict) a slight increase in the price of oil in the near future and evaluate it precisely at the level of $88.52 per barrel. There are probably certain prerequisites for this. The main one is, of course, the global decline in the volume of its production, including against the background of a slowdown China's economy and the embargo on Russian oil.
If a futures buyer sees in all this that the price in October may be even higher (relative to the futures price of $88.52 per barrel), he can buy it and resell it more expensive in October, and make money on it. Or, on the contrary, incur losses in the event of its fall, relative to the October level (at which he will buy now).
To offset their risks, sellers always adjust the price closer to the date of execution of the futures contract to the spot price (the one at which it is traded today).
If a futures seller were selling an asset for it for tomorrow, then, as you know, its price would differ little from today's level. The period (time) gives a certain time for the execution of any events, which may eventually affect the price of the asset when it will be necessary to sell it. This is the speculative meaning of futures transactions.
Relative to the price level of support and resistance of the current session for the same oil.
Oil price, during the trading working day at the exchange , fell to the level of 86.15 dollars - that there is support, and grew to 89.64 dollars - that there is resistance. All this information is derived based on the volatility of the price over a certain period of time - its minimum and maximum. That is why such concepts of stock trading as resistance and support are used in the context.
If oil futures show a slight increase, then dollar index futures, on the contrary, showed a decrease (most likely for the same October). Well, here we can already note the development of the classic scheme dependence of the oil price on the dollar - when one grows and the other falls. And of course there can be quite a lot of reasons for this, mainly related to the same global economy and geopolitics in the near future.
