Try your hand at online oil trading with Golden FX
If you’re currently struggling to choose an optimum option for your investment, then online oil trading on a reputable trading platform would be the best choice for you. Not only traditional currency pairs, digital coins, shares of high tech giants can bring you a good income. Such an old-school substance as oil isn’t inferior to anything mentioned above in this regard. What’s more, you can conveniently trade it on your laptop with a reliable broker Golden FX, enjoying the comfort of your home.
Oil: why is it so valuable?
Before we get down to profitable online oil and gas trading with Golden FX, let’s find out why oil is so highly valued by people. Well, before the Industrial Revolution, such agricultural goods as wheat and corn dominated the commodities market. However, today exactly crude oil as well as its derivatives happen to be the most traded commodities around the globe. There’s nothing surprising in this fact, given how crucial oil for the world’s economy is. It’s utilized not only transportation and manufacturing, but many consumer goods depend on this resource too.
Some people think that oil is nothing just fuel, enabling people to power ships, cars, jets and so on. Well, fuel is a crucial thing, but except it, oil turns out to be an important element in the manufacture of various synthetic textiles, fertilizers, plastics, cosmetics, steel and even computers. What’s more, out of a 42-gallon barrel of this substance less than half goes directly to fuels production, while the rest is utilized to make a rich variety of consumer products.
Different types of oil
Although the market for this commodity is global, trading this resource is clustered around a number of primary regions. In each of these regions, crude oil has a bit different properties, mainly having to do with its sulfur content.
Each of those crucial oil trading regions has already established corresponding benchmarks for tracking price movements in different types of this commodity:
- Bonny Light can be defined as a light sweet crude extracted in Nigeria. We can say that African oil has its own benchmark, and it’s Bonny Light. That’s a true benchmark of African oil. As for its properties, they resemble those of Brent and WTI. The demand for this African oil is mainly powered by American as well as European oil refineries.
- West Texas Intermediate or WTI for short is light and sweet. On the American Petroleum Institute gravity scale its gravity accounts for 40. As for its sulfur content, it’s quite low. If you’re interested in oil online trading with Golden FX, you can certainly try this popular asset.
- Sweet and light Brent crude oil is extracted from the North Sea. In terms of gravity, it has much in common with WTI. However, it offers more sulfur. Many investors think that it’s as suitable for investment as WTI.
- Urals happens to be a sour heavy crude exported by Russia.
- Also dubbed Fateh, Dubai crude has more sulfur than Brent and WTI and also outperforms them in terms of density. As a benchmark for crude shipments in the Middle East, it’s quite convenient.
- OPEC Reference Basket can be defined as a weighted average of the combined oils extracted in the OPEC region. Unlike Brent and WTI, it’s much denser.
What influences the price of this commodity?
Specific grades of this commodity turn out to be identical for crude trading purposes, no matter where they’re extracted. For example, a WTI 1,000-barrel contract is the same as the crude produced in North Dakota or Texas.
As with any other commodity, demand and supply are also crucial for crude pricing. However, we should confess that the global pool of crude as well as the ease with which this commodity is transported around the globe level some of the typical price pressures of demand and supply. Moreover, the financial world keeps trying to restrict the influence of one big crude producer or any other in the world’s crude market.
In the Middle East huge resources enabled such states as UAE to quickly create infrastructure and make huge investments in other sectors of their economy.
Moreover, new resources have shown up, such as Canadian crude sands or American shale oil. They greatly contribute to the global crude supply. However, taking into account their extraction costs, one can ascertain that they’re competitive only in a lower supply.
According to the International Energy Agency, it foresees soaring global demand backed by a leaping world population, ascending energy consumption in developing countries, as well as surge in the road transportation, aviation and petrochemical sectors. Despite the members of the Organization for Economic Cooperation and Development are currently cutting their road transportation crude consumption on a per-car basis, the soaring car fleet in developing states greatly offset those reductions.
Persuasive reasons to trade this commodity
Apparently, online oil trading has a number of advantages over investing in such traditional assets as shares. Depending on your investment goals, oil trade online can be effectively employed for:
- Diversification: Adding crude commodities to your investment portfolio actually lowers the total volatility due to the fact there’s no correlation between the given asset classes. Such commodities as crude are useful when it comes to withstanding unwanted price movements in a conventional portfolio.
- Inflation hedging: Commodities feature intrinsic value that is absolutely independent of currency. To put that another way these assets preserve their value even when the value of currency heads south in an inflationary environment. It’s especially true for crude, considering the reliable and constant global demand.
- Safe haven: Evidently, commodities are good in times of global economic downtime because they tend to retain their value when facing market turbulence. Therefore, investing in this asset can be a rational strategy to withstand losses if the market takes a downturn.
- Speculation: Wild swings in the value of commodities are a common thing. Therefore, investing in crude derivatives and futures is an excellent way to earn a decent income from fluctuations in crude prices. These assets can gain or lose in value more than by 10% in just a single trading session. It’s no wonder that a great number of institutional investors purchase crude-linked assets for their pension and endowment funds.
You’re on the right path if you’re eager to know how to trade oil online. It’s because the most impressive advantage of oil trading is that demand for this commodity is 100% guaranteed. There can be fluctuations in its supply and also prices, but what can be taken for granted is that this commodity will be in great demand in the future. It’s because it’s crucial for the global economy.
Skilled traders can earn substantial profits with oil ETFs and CFDs. You can also learn how to do it if you become a client of Golden FX. Open a trading account with the broker and have some practice. Good luck!