- 25 Nov 2022 07:33:43
Crude oil is not only a product but also an asset traded whose price constantly fluctuates within the world's economy and political systems and geographically. For a costless bitcoin trading venture, the platform charges zero commission on both profitable and non-profitable trades. This volatility means many lucrative opportunities for traders with the proper knowledge to position themselves correctly to make money in both up-and-down markets. This article will outline crude oil trading and how you can trade it. For more info visit websites like the https://oil-profits.com/fr/
What is Crude Oil Trading?
Crude Oil trading is the dealing in the price of crude oil (along with other commodities such as gold, silver, coffee and natural gas) on the futures market. In a futures market, traders purchase an agreed-upon amount of goods at an agreed-upon price before they are delivered. It allows them to access goods that would typically be difficult or impossible to obtain on short notice because they cannot pay the total retail price upfront. The advantage of the futures market is that it allows a trader to take advantage of price fluctuations while minimizing risk.
How is Crude Oil Traded?
There are two significant factors to consider before trading crude oil; the first being location and the second being market structure. Location, you must be where you can trade crude oil futures contracts and market structure because this determines how many different types of traders there are in the market and how much money they can invest at any given time. These factors will determine your techniques to maximize your profit potential.
Learn What Moves Crude Oil:
As mentioned earlier, the market for crude oil is not necessarily stable. As a result, many factors determine the price of crude oil: supply, demand, and politics (such as OPEC agreements) can influence crude oil prices. But when we look at these factors individually, we find that supply is the most significant factor determining prices.
In a regular market, significant increases in supply mean small to medium increases in price; however, if you consider changes in the total amount of supply in the world at any given time as a whole, it becomes clear that companies can meet significant changes in demand with large changes in price.
In this way, it can be said that changes in production are a primary factor in determining crude oil prices. The number of barrels of crude oil produced each year and the total amount of barrels of crude oil produced each year by all companies are some factors responsible for moving the oil price. It includes significant sources such as Saudi Arabia, Venezuela, and Russia, as well as minor sources such as Nigeria, Sudan and others.
Choose Between Brent and WTI Crude Oil:
Brent and WTI are the two major types of crude oil traded on the futures market. As its name suggests, it is transported to the Brent oil terminal in England before being exported to customers worldwide. For this reason, it acquired its name; "Brent" was an abbreviation of "Bermuda Eastern" because it had been transported through Bermuda for refining and shipping to England before continuing on to North Sea terminals.
WTI, or West Texas Intermediate, is a type of crude oil extracted in Texas and transported to the WTI oil terminal in Cushing, Oklahoma. WTI is high quality and typically goes to destinations in the middle US and Asia. It's essential to know the difference between Brent crude oil and WTI crude oil because they are priced at different levels.
Read the Long-Term Chart:
The long-term chart of crude oil (shown below) shows a steady increase in the oil price over the last 5 years. As a result, the oil price has increased by more than 200%. The chart also shows that both WTI and Brent crude prices follow different cycles, with Brent's cycle being longer and WTI's being shorter. Brent's cycle is based on the month of August-September, where you have to have enough inventory to cut your cost of production, whereas WTI's cycle is based on February, where you must sell your entire stock for the best profit.
Evaluate Storage Facilities:
One of the main factors affecting the price of crude oil is how much storage space is available to store it. Because of this, large companies such as ExxonMobil or Shell will have enormous physical assets to produce; however, smaller companies might have a different situation. Small firms must pay for storage space upfront before production makes a profit.
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