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Crude Oil Trading is the trading of crude oil. Crude oil is a substance which naturally occurs and which is found in rock formations. Crude oil is extracted and then refined into many products, including gasoline, kerosene, naptha, fuel oil, gas oil and liquefied petroleum gas (LPG). Oil wells are dug in order to release oil from the earth. Whilst oil has been extracted for over a thousand years, it only became a global fuel source in the 1950s. Since this time, crude oil trading has become an important part of the futures market.
Those considering crude oil trading will be interested to know that there are different types of oil, namely sweet, sour, heavy and light. Sweet oil contains less sulphur, whilst sour oil contains a higher quantity. Heavy oil has a higher density, whilst light oil has less viscosity. The market prefers light, sweet crude oil as it requires less production time. Such information is important to note if you are planning to become involved in crude oil trading.
Crude oil trading involves the trading of crude oil as a commodity on the financial market. Crude oil has a ticker symbol, margin requirements and a contract value, as does every other commodity. Understanding how crude oil is traded is imperative to calculating potential losses and profits. Those who engage in crude oil trading will sell or buy a crude oil contract based on how that oil has been performing in recent times.
People who are experienced in crude oil trading know that the value of crude oil is based on the value of the crude oil contract multiplied by the current market price. Commodities, including crude oil, are traded according to their margin. The margin will change according to market volatility and the face value of the contract. The futures market, on which crude oil trading takes place, affords investors exposure to leverage, hence crude oil trading is an attractive prospect.
There are many factors which will affect the price of crude oil and hence crude oil trading. Since the 1960s the price of crude oil has been shown in US dollars. A change from US dollars to Euro or a basket of currencies as the quotation method for crude oil could lead to a decrease in oil prices. Diminishing crude oil supplies again may drive oil prices up as alternatives to oil are investigated. Alternatively, the increase in the use of green technology may lead to oil prices diminishing. Any of these scenarios will undoubtedly affect those who take part in crude oil trading
If you would like to find out more about crude oil trading, get in touch with Accendo Markets today. We are more than pleased to assist you, whether you’re just starting out in the trading world or you’re an experienced trader looking to branch out. Expert analysis, experienced brokers and superb technology are available to all of our clients. Before you know it, you will feel equipped and ready to begin crude oil trading.