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Trading Oil Stocks
In trading oil stocks and trading oil futures traders have been keeping tabs on the violence in Libya. Using technical analysis with Candlestick stock charts they gauge evolving stock market and commodity market sentiment. Fundamental analysis of this situation is fairly basic. Political unrest in the North African oil producer threatens the production, refining, and export of crude oil and its products. For Shell and Exxon-Mobile, who have recently reentered Libya, one might expect the Libyan unrest to be a threat to production but for other producers outside of Libya a rise in oil prices due to Libyan problems could be profitable, at least in the short term. As in all such situations the news drives the prices of stocks and futures. However, the fundamentals are typically discounted very quickly. As such it is through the use of Candlestick analysis that stock traders can anticipate the next movement in stock prices and profit accordingly in trading oil stocks.
Commodity traders as well as stock traders will likely view the Libyan situation as a temporary trading opportunity in trading oil stocks as well as oil futures. Like the recent unrest in Egypt the mass demonstrations may well be resolved peacefully and may have no effect upon oil production and export. As such, stock market investors may profit from short selling when prices have been driven up by the news, if indeed they are correct in thier believe that prices of oil and oil stocks will settle down again. For trading in companies doing business in Libya, whose stocks may be depressed by this situation, it may present an opportunity for buying at the bottom of a news-driven dip in stock prices. Again, the fundamentals tend to be discounted by the market quite rapidly so the best bet for profits tends to be to watch the market with Candlestick pattern formations. The investor can use Candlestick trading tactics to garner short term profits from this unstable situation in trading oil stocks due to the situation in North Africa.