Crude oil is a naturally occurring petroleum product commonly used in energy production and manufacturing. It is typically purchased with the intent to be refined into everyday uses such as diesel, gasoline, crude forex oil, jet fuel, plastics, cosmetics, medicines and fertilisers.
As such its price has a dramatic impact on the global economy. It is traded in high volumes all around the world. Learn To Trade Oil – Free Webinars, Ebooks and 1:1 Training at Markets. In general, higher oil prices tend to undermine economic growth as this increases travel and shipping expenses, which increase inflationary pressures. If the price of oil remains high over a long period, the cost of downstream products like plastics and fertilisers are affected as well. The leading Social Trading platform with 4.
An efficient, secure deposit and withdrawal experience. ATFX welcomes Scalpers, Hedging, Expert Advisers and more. What this means, from a trader’s point of view, is that when the price of oil is high and has remained high for some time, oil producers take steps to reduce the price. OPEC agree to production slowdowns, and importers reduce purchases. When the price of oil remains low for too long, the companies that explore and drill for oil cannot raise the capital they need to find and produce enough of it. Because a sufficient supply of oil is essential to the economic security of all of us, it is critical that these companies be able to continue their work. But there are other events that have to be observed when trading oil.
Geopolitical insecurity almost always has a direct effect on the price of the commodity. War, or the threat of conflict, will push the price of oil up. The trader also has to be aware of the destabilising effect that shale oil production in the US has had on the global oil price. The industry is still trying to adjust to the vast changes that this trend is imposing on it. Forex platforms now provide ways for you to trade into oil futures, without actually having to trade the futures themselves, and thus avoiding the necessity of ultimately taking delivery of the oil which is a concomitant of the futures trade.