For some time now, the world has been focused on oil. After all, a while ago, a supply glut in the commodity reared its ugly head. Since then, the commodity has traded at crisis levels, leading to economic concerns in many regions. Nonetheless, last week was a week of good news for oil. The long awaited OPEC agreement was finalized. Below, we'll talk about the agreement, why it's such big news for oil, and what binary options traders should be watching when trading the commodity ahead.

OPEC Finally Reached An Agreement

As mentioned above, the big news surrounding oil last week had to do with OPEC, the world's largest oil cartel. Months ago, following a well-covered meeting, OPEC said that it had reached a deal to reduce the production of oil. However, at the time, the deal was met with skepticism, and for good reason.

The truth is that when the deal was first announced, it really wasn't a deal. Instead, it was an announcement that OPEC members have agreed to agree on a plan to reduce production. However, the plan was far from solidified. At this point, no one quite knew which countries would agree to cut what amounts of oil production. To make matters worse, large producers like Iran and Iraq were not thrilled about the deal, and it looked like it would take some work to get them to agree in the end.

Nonetheless, last week, more news was released with regard to the OPEC deal. You see, when the first announcement was made that the members had agreed to agree, the oil cartel said that it would be producing a finalized agreement by November 30. While the skeptics didn't believe it was going to happen, on Wednesday, November 30 OPEC did finalize the agreement. Iraq, Iran, and many other countries known for producing large amounts of oil have agreed to the cut. At the end of the day, the deal cuts about 1 million barrels of oil from OPEC production per day.

Why This Agreement Is So Important For Oil

As with any other commodity, price movement in oil is largely dependent on the law of supply and demand. When supplies outpace demand, as they have been doing for some time now, the price of oil falls. However, when demand outpaces supply, the price of oil climbs. With the oil production cut in mind, supplies of the commodity are going to be on the down trend. At the end of the day, this means that the price of oil will likely head upward.

What Binary Options Traders Should Be Watching Ahead

Moving forward, there's no doubt in my mind that there are going to be some large opportunities for binary options traders surrounding oil. With the recent OPEC agreement in mind, it looks like oil is going to continue soaring. However, looks can be deceiving.

Moving forward, it's going to be incredibly important to watch overall supply and demand data surrounding the commodity. While OPEC's agreed upon cut sounds great, all it's actually doing is bringing production back down to the same level we were seeing a few months ago. At the end of the day, the glut is still far larger than the cut. When the supply and demand data shows this, we could see a big reversal. Nonetheless, keep a close eye on the news as any news on the topic will likely prove to be a signal of movement to come in the value of oil.