Oil

With DeltaFXMarkets you can be a successful oil trader

For a long time, oil trading has been a pillar of the commodities market. However, it is not always suitable for everyone, so here we will try to help you decide whether oil commodities are suitable for your portfolio.

Some facts about Oil trading

‘Oil Trading’ is a blanket term, covering far more than you might think. Crude oil is the source material for everything that fuels an internal combustion engine- petrol, oil, diesel, even paraffin demand, all has an impact on this market. It may appear confusing and complicated at first, but it’s not like that. There are very good indicators that will tell you how oil trends usually fluctuate.

The benefits of Crude Oil Trades

At DeltaFXMarkets we can explain the numerous benefits that oil trading can offer your portfolio, for example:

Oil is in a perpetual demand in today's market.

Cars never go out of fashion- and we’ve yet to replace their heavy energy demands.

Fossil fuels are easy to produce, while alternative energy sources haven't reached that level yet. We keep using oil as a raw material and the demand is still high.

Fluctuating source production and finding new ones means that prices are constantly changing- a fact you can use to your advantage.

Oil trading is a very liquid market.

The Oil Market explained

It might seem very complicated and confusing at first, but it’s actually pretty straightforward to leverage oil trades to your advantage. There are several main principles a lot of traders swear by: Firstly, there are two benchmarks you need to be aware of. Brent Crude is a sweet, low Sulphur and light oil. It mostly comes from the European North Sea. WTI is also sweet and light, but it's made in the US. Both prices are typically reported.

Politics play a huge role in the oil market and you need to keep track of Europe, Russia, the US, and the OPEC countries (the Middle East and South America), China is a rising player. Consider global and domestic production if you’re in an oil producing country. Remember drilling for oil is expensive and that’s why they keep trying new techniques. In the end, production is always driven by demand. These are the driving factors around oil prices and this can help you a lot with your trading!

Always keep abreast of the news to know how all these various factors are playing off of each other. You could have high global demand and low domestic. OPEC could be withholding supplies. Fracking sites could be opening. All of these have impact on the oil market. Past that, some time spent with past market figures (while never indicative of future performance) will be all you need understand the basics of the oil market and its quirks. Oil trading needn’t be hard, especially if have DeltaFXMarkets’s platform.