Oil trading is traditionally one of the most prominent and attractive areas of the market, mainly due to our modern world’s dependence on various fuels for numerous and diverse industrial and everyday applications. Crude oil is at the core of all products that make engines turn, including petrol, gasoline, diesel, paraffin, and more.
The tremendous of this sector of the commodities market makes it both attractive for traders and intimidating for beginners. Among the advantages of oil trading are high and steady demand, its competitive prices in comparison to alternative fuels, and high liquidity. The constantly changing dynamics of production thanks to the emergence of new sources create substantial price fluctuations creating opportunities for traders to profit.
To succeed on this market, it is important to be familiar with the basics such as the main benchmarks and their price trends. It is also important to monitor political events as relationships between petrol-producing and petrol-consuming countries influence demand and supply causing changes in oil prices. Development of new drilling techniques requiring smaller investments may also help drive prices down.
Ultimately, the latest news and the interplay of various other factors affecting oil trade will be a good indicator of what to expect from the market. Another good source of information is data on oil prices from the past in conjunction with political events occurring at the time. Juxtaposing the two will give you insights as to what to expect in various circumstances and how certain developments can affect the market. Past performance may not be a reliable indicator of future results, but looking at past data will still give you some valuable clues in your trading.