Forex brokers trigger close-only mode for oil trades before OPEC meeting

Forex brokers trigger close-only mode for oil trades before OPEC meeting

- in All News, Forex Brokers
Oil

Forex brokers HotForex and RoboFores both said on Friday in separate notices that they will temporarily change the condition for trading in contracts for difference (CFDs) oil for all trading accounts, due to expected reduction in liquidity caused by the upcoming oil producers’ summit in Doha. Both brokers will switch to close-only mode for Brent and WTI oil during the weekend.

RoboForex will trigger the close-only mode after 1200 PM server time on Friday and HotForex will follow in at 2000 GMT+3h in the same day. Investors will not be able to place new orders in oil instruments, but will be able to close existing ones. Normal trading conditions will resume as usual on Monday with the opening of the trading session.

The trading conditions of no other instruments will be altered.

Meanwhile, earlier this week FxPro, another forex broker, doubled the margin rates for spot energy tradable instruments to 1%-5% per lot, depending on the order size. With the move, the broker aims to mitigate the risk associated with leverage trading.

The move of HotForex and RoboForex aims to minimize potential client losses caused by the expected uncertain market environment, resulting from the meeting of the Organization of the Petroleum Exporting Countries (OPEC), which will take place on 17 April, 2016 in Doha.

Oil prices
Take a look at the Brent and WTI oil price movement in the past one year

The OPEC meeting will gather representatives of nations, which account for about 60% of the world’s oil production. They will try to negotiate and put a cap on the output at levels equal to those in January this year. Oil oversupply has been having a harsh impact on prices, which have been fluctuating heavily in the past months, despite an overall recovery since late January (partly due to speculations regarding the OPEC summit this weekend). However, due to disagreements, there is a likely scenario where the countries may no come up with a decision. If they fail to make a deal, prices could experience a harsh negative impact.

Saudi Arabia and Russia are two of the key oil producers in the world. While Russia is very likely to say yes to the production freeze deal, Saudi Arabia is a big question mark. A big no is expected from Iran, another key figure.

What would be the decision of the leading oil producers will become clear this weekend.

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