Trading Crude Oil

Crude oil comes naturally in underground rock formations. Extraction might be a complicated process and happens both on and offshore. Crude oil needs to be refined for petroleum products like gasoline. Depending on where it is taken from, crude oil is classified by its viscosity (light and heavy), and sulfur content(sweet or sour). Popular crude oil deliverable grades are West Texas Intermediate, U.K. Brent, Norwegian Oseberg Blend, and others.

When trading oil, it is good to consider many factors, including theories on peak production, where available oil reaches a peak level, flattens out, then a decline. Let’s mention here global warming, which has caused panic among traders since the development of green energy sources diminishes consumption. In any circumstance, oil has proven a popular and exciting commodity to trade.

What affects the Crude Oil price movement?

When trading oil, there are two significant points: supply and demand. Whether there was an economic report, or political event or any tensions in the Middle East, the two factors that will be studied supply and demand are impacted, because this will affect the price.

Supply Factors

Outages or maintenance
All the refineries must be monitored because of the effect it can have on the supply of oil. The most important ones in the world are Forties pipeline in the North Sea, Port Arthur refinery in Texas, etc. Even wars shake the prices, as it was the war in the Middle East, in Libyan in 2011, prices had seen a 25% rise in a couple of months.

OPEC (Organization of the Petroleum Exporting Countries)

Delivers policies to cut or add the oil supply. To bring in memory, back in 2016, when the cartel announced their decision to cut the global supply by 1.9%, the price of oil has risen from 44 to $80/bbl.

Oil Suppliers

As it is essential to know about OPEC and its policies, it is also worth knowing all the latest news and updates over the crude oil market. Stay updated on your trading platform with the latest market news.

Demand Factors

Seasonality
It might be hot summers, and people will be consuming higher oil consumption, or cold winters will cause people to consume more oil products to get cold their houses.

Oil Consumers

U.S and Europian countries are the largest consumers of oil; however, in recent times, Japan and China have shown considerable interest and a large amount of oil consumption. So, it is vital for the traders to pay attention to the countries which are raising the volume of oil consumption, alongside their economic performance. Any slowdown could affect fall on-demand and oil prices going down.