As a trader, the recent news from OPEC in Vienna, Austria will be a breath of fresh air to you. If you were bullish on oil as an investment opportunity over the long-term, there’s nothing for you to worry about. If you are bullish on oil as a short-term investment opportunity, you may be somewhat disappointed by the recent decision by OPEC to continue pumping 31 million barrels per day. However, the trading arena presents opportunities aplenty and not all of them are linear. You could for example trade oil on the downside by placing put options on black gold. This would yield a favorable outcome for you over the short to medium-term given that oil is not going to reverse direction anytime soon.

2016 is slated to be the year that oil inventories diminish substantially, owing to the shuttering of multiple shale oil producers in the US, as well as several OPEC countries that cannot maintain pace with production capacity at current prices. As the supply of crude oil diminishes, so inventories will stop building as quickly and the price will start rising. This is the theory, and of course the entry of Iran and its 1 million barrels per day capacity will certainly flood the markets with excess capacity that they can do without. But that is not scheduled to take place until late 2016.

For now, only options traders will have a field day placing put options on crude oil, as I have consistently maintained the war of attrition between OPEC and WTI crude oil producers cuts deep.

The Current Price of Crude Oil: WTI and Brent Crude

Presently, the price of WTI crude oil on the Nymex for delivery in January 2016 is $36.79, and the price of Brent crude oil on the ICE is $39.94. Much the same picture is true for natural gas and crude oil in Tokyo. The decision by OPEC has rocked the markets in a big way and the number of put options on black gold has spiked since the decision was taken. The question: where is the bottom for crude oil? is a difficult one to answer, owing to the complexities of the global economy.