Trading oil online has increased in popularity with the pop-up of various online market exchanges nationwide and worldwide.
The key factors of what moves the oil markets include the Organization of Petroleum Exporting Countries (OPEC), pricing speculation, global supply and demand, and oil inventory demand.
Understanding how these elements play a part in fluctuating oil prices will help you to know how to react to each possible event.
Oil Price vs the USD
The oil price and the United States Dollar (USD) share a direct link.
As the USD appreciates in value, there is a depreciation in oil prices. Certain studies have shown that an increase in real oil prices have led to increases in the real USD’s value. If a nominal increase occurs for the USD, then sometimes oil prices have lowered as a result.
The Organization of Petroleum Exporting Countries (OPEC) can have a huge influence on oil prices worldwide. In 2020, the organization was in control of over 70% of the crude oil reserves throughout the globe as well as over 35% of overall crude oil production.
OPEC is the organization that seeks to stabilize oil prices across the world so that there are no harsh fluctuations and the 15 member nations are able to make an income off of oil imports and exports.
- Pricing Speculation
Experts say that speculating on oil prices plays a part in its value fluctuations. Investors that purchase a futures contract are looking to see an increase in the oil price value by the end of their contract. The more people that want to invest in oil futures, the higher the price will be.
- Global Supply and Demand of Oil
If there is any change in the global supply of oil, this could change its price value. One scenario would be if OPEC, which is the main driver of the global oil industry, decides to decrease oil production, this will increase oil prices
As different countries expand their industrial economies, that means there is more of a global demand for oil. As the global economies increase for oil demand occurs in countries such as India and China, then this means oil prices will rise.
If you are currently invested in oil when this happens, keep this investment so that you can reap the benefits of its increase.
- Oil Inventory Demand
If there is any uncertainty about the amount of oil available throughout the world, this will affect fluctuations in its value. Should countries be forced to store oil for future use because of an oncoming shortage, this will drive up oil prices.
Any instability in global politics in certain countries such as Iran, Iraq, Nigeria, or other countries that produce oil throughout the world will cause speculations about whether the oil inventory will be plentiful or in a shortage.
How To Trade Oil Online
Trading oil online has become an easier process in today’s changing economy. Choose the exchange you wish to buy and sell oil, sign up for an account, and browse the oil trading options that the online exchange has to offer.
You can go about trading oil via mobile apps to make it more convenient to trade on the go. The easyMarkets trading app allows you to trade your CFD oil shares using your smartphone anywhere you are.