One of the news stories that has recently flown under the radar is the fact that President Obama shot down the Keystone XL pipeline. This was designed to move crude oil quickly and safely through wilderness areas, but the pipeline was rejected because of environmental concerns. This is a noble concern, but it does bring up a vital concern: will the oil that was meant to be transported still be able to be moved quickly and cheaply?
First, take a look at the logistics. The pipeline, which was proposed in 2008, before Obama even was sworn into office, was projected to carry 800,000 barrels of crude a day. It was supposed to move oil from Canada and North Dakota to Nebraska, where it could then be moved effectively to refineries on the Gulf Coast. This would allow the U.S. to better use its own oil supplies and not be as reliant upon foreign oil. The goal was to help the U.S. economy, create more jobs, and reduce dependence on foreign countries.
It’s easy to see that this could have a negative impact on things right away, but what will it have the most immediate impact on? If you can determine this, then trading on the short side of things will allow you to create a quick profit, especially if you are able to find a low cost trading method for this such as with binary options. The company that has the biggest stake in the Keystone lines is TransCanada. This will be a big score against them, and it’s likely to see their price drop considerably. However, this is not a company that is usually seen in the binary options industry. However, they are a publicly traded company, and the day that the rejection of the plan was announced, their stock fell in price by over 5 percent. It’s likely that this trend will continue for the time being, although probably not at the same pace. This is a big loss for the company, though, and it will take some time for it to get back to the level it should rightly be at when it comes to stock prices.
It seems like this action should also have a short term impact upon oil, but this is economically going to push the price of oil up. It increases the scarcity of oil, and this in turns makes it rare and more expensive. But as oil has been struggling as of late, it is going to not have a huge positive push. Oil was once up over $100 a barrel, but currently sits at under $45 per barrel. The rejection of the pipeline will prevent some extra downward pushes in price, but the impact will be minimal and short lived.
Next, there is a need to find the big victors out of this deal. Venezuela’s economy stands a chance of being the biggest winner. They have the world’s largest oil field, and they are a regular exporter to the same refineries that the Keystone XL was supposed to supply. Without Canadian and American oil coming in, more oil from outside sources will be sought, and Venezuela has the largest amount currently on the table to supply. Being able to sell more oil to the U.S. would help the Venezuelan currency a ton, as well, thanks mostly to the fact that this economy is considered to be a socialist one. If the government were to be able to increase oil sales, the Venezuelan bolivar would be boosted considerably against other currencies. Currency traders in any form, whether they be Forex traders or binary options traders, will be able to profit off of this by riding off of this momentum.