Rapid Changes in Oil Prices Spur Spike in Oil Futures Derivatives

A spike in oil future derivatives is likely to transpire now that oil-producing countries finally took action to arrest the continuing decline in oil prices.

What Caused the Collapse in Global Oil Prices?

The collapse of global oil prices went as low as $2. per barrel, only to slump further at 25 cents per barrel. Price drops were driven by the excessive supply of oil amidst the coronavirus crisis. Inasmuch as the economies of countries across the globe halted, the demand for oil rapidly vanished and caused a reverse trend on how oil prices go in the global oil markets.

As prices continued to drop, member countries of the Organization of Petroleum Exporting Countries (OPEC) finally came to an agreement to cut their supply of oil. That way, a semblance of balance will be achieved if less will be available until such time that supply, becomes more or less, proportionate to current demand.

A more significant step that was taken, was the suspension of oil production. Since nearly all storage tanks remain full, none will be available if oil fields and drilling sites continue to pump out oil. Currently, the price of oil is coursing at an upward trend, as the demand for oil and petrol products is likewise increasing in countries that are gradually reopening their economies.

Still, rapid changes in oil price are  taking place, as countries in Asia where Russia’s oil are being delivered, are currently experiencing a second wave of the COVID-19 pandemic. In the U.S., several states are also experiencing a second wave; although it is widely suspected that the additional cases are mere extensions of the first wave.

Nonetheless, stock market investors have little confidence in buying shares of oil companies despite their ridiculously low prices. The general consensus is that it will take time before oil companies can recover from the losses caused by the oil-price collapse. That being the case, not a few, but many financial traders are turning their attention to oil futures and their related derivatives.

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Newbies are Advised to Practice First Before Participating in Derivatives for Oil Futures

Although derivatives for oil futures may have the appeal of being a straightforward yet lucrative transaction, it would be best for newbies not to quickly jump in. The matter of making decisions on whether to agree (Yes) or disagree (No) to a proposition requires careful thinking and assessments of global conditions. A wrong decision over a proposition could spell substantial losses that one might find hard to recover.

Newbies should first take time to practice by using a demo or practice trading platform like the one that they will find at https://ipoption.com/

The platform is offered free of charge by leading CFD broker IQ Option Europe Limited, which comes with a 10,000 demo money value. This broker is licensed and regulated by the Cyprus Securities and Exchange Commission, which requires licensed brokers to offer a demo trading platform that has the same and exact features as the platform used for real money. The only difference is that the demo software runs only on demo-money.

Another great thing about using the IQ Option demo trading platform is that for a minimum deposit of $10, new members can practice all they want and for as along as they want.

Missed Credit Card Payments Soar High Due To Corona Pandemic

While the stock market (visit stocktrades) is becoming unstable, many credit card payments have been skipped because millions of Americans have become unemployed as a result of the coronavirus epidemic. Banks and other lenders (who have relied on high consumer spending to make huge profits for years) are preparing to deal with customers.

Credit Card Payments Delayed Due to Coronavirus Outbreak

Credit card payments are one of the fastest places to find financial (short term) security. When a person runs out of funds, this is usually the first loan that goes unpaid. In general, security is not maintained, so if the credit card holder stops paying, the lender is rarely reimbursed.

Many major card issuers, including Capital One, Discover Financial Services, and Synchrony Financial, allow credit cardholders to suspend credit card payments for more than a month. Some have reduced or abandoned arrears and interest expenses, and assigned some customer credit.

With this pause, some borrowers can only float temporarily. Companies and analysts expect payment delays and amortization to increase later this year. Banks and other lenders can only pay unpaid loans until they face payment.

By this year, Discover and Synchrony’s stock market value has evaporated to more than half. This is much less than about a 12% drop in the market, while areas less affected by unemployment (e.g. technology, health care, and consumer necessities) are much worse.

Discover and Synchrony announced this week that payments to thousands of lenders, including many credit card customers, have been delayed. According to Nilson’s report, Capital One, which has about 120 million credit card accounts in the United States, registered 1% of valid card accounts in the extension. These three banks can measure the financial condition of some US consumers. Discover and Synchrony are generally not sold to high-yielding customers, Capital One has many customers and credit scores are below the perfect level.

Banks hope that delayed payments will take time to recover the economy and bring consumers back. However, for those who do not know when to resume work, this may not be enough. Even before the epidemic, many Americans were overwhelmed and used to record credit cards and other debt to keep pace with the increasing costs of college, healthcare, housing, and other costs.

Discover, Capital One, American Express Co., JP Morgan Chase & Co. And other card issuers have raised billions of dollars in additional funds to prepare for potentially large credit losses. “We’re clearly getting worse,” said Roger Hochschild, CEO of Discover Discovery. “It’s very fast and miserable.” Some lenders have reduced creditworthiness for new applicants or existing customers.

Banks like Citigroup Inc., Discover, and Synchrony have closed credit cards that haven’t been used for a while or have reduced spending limits. The company said it has taken steps to reduce risk before pandemics. However, due to these measures, some borrowers can only get loans when they need it most. However, for card issuers, loss of payment is not the only problem.

Card spending for travel and other categories is decreasing. This means that many of the fees charged by banks when making payments by card do not generate much income. And since people at home do not shop, many people cut their credit card costs. This is a problem for publishers specializing in business cards (including sync and affiliate data systems).

Brian Riley, Chief Credit Consultant of the Mercator Advisory Group, said: “Until everything is settled, the credit card’s profitability and risk will be greatly reduced.”