Invest in Crude Oils. Table of Contents
- What are Brent and West Texas Intermediate Crude Oils?
- Factors Affecting the Price of West Texas Intermediate Crude Oil
- Factors affecting the price of Brent crude oil
- Merits and demerits of investing in West Texas Intermediate Crude Oil
- Merits and demerits of investing in Brent Crude Oil
- Price History of West Texas Intermediate Crude Oil
- Price History of Brent crude oil
- How to start investing in Oils on XM?
What are Brent and West Texas Intermediate Crude Oils?
WTI crude oil (West Texas Intermediate Crude Oil) is one of two global benchmark crude oils. West Texas Intermediate crude oil and Brent crude oil are the most concerned products in the entire energy product market. Since it is related to world economic and geopolitical events, it is also of great concern to all traders.
Brent crude oil or Brent light sweet crude oil is rapidly becoming the global benchmark for the crude oil industry and the entire energy market. Because the price fluctuates greatly and is closely connected with the global economy, it is very popular among traders.
Factors Affecting the Price of West Texas Intermediate Crude Oil
There are many factors that affect the relationship between oil supply and demand, and they also affect the price of West Texas Intermediate crude oil.
The demand for oil depends on the size of the global economy. As the economy grows, so does the demand for oil. However, because the market is forward-looking, oil prices reflect the expectations of future economic growth and are also affected by consumer confidence, inflation, interest rates and political events.
Supply is affected by new investments in exploration, drilling, processing and storage capabilities. Including oil reserves, geopolitical events, OPEC’s production goals and the ability to transport oil on a global scale.
Other factors affecting oil prices include the strength of the U.S. dollar and the ability to generate energy from renewable energy sources (including wind and solar) under construction. Because most people actually gain access to the oil market by trading West Texas Intermediate crude oil, the dynamics in the futures market will also affect prices.
Factors affecting the price of Brent crude oil
Brent crude oil prices are affected by many factors. Brent crude oil is mined off the coast of Europe, which means that its demand is closely related to the economies of Europe and Africa and the global economy.
To understand the factors driving the increase in oil prices, you need to understand the conditions that affect both supply and demand.
Demand is driven by the level of economic activity around the world, and more specifically, driven by expectations of future economic growth. This means that consumer spending, industrial activity, interest rates and inflation are all important factors to consider.
Merits and demerits of investing in West Texas Intermediate Crude Oil
Trading crude oil is a way for traders to profit from macroeconomic trends and events.
Crude oil prices have experienced a strong trend that has lasted for several years.
Geopolitical events can generate volatility and bring opportunities for traders.
Unexpected events can cause unexpected price fluctuations.
The crude oil market is very complex and requires a lot of research to understand the current impact.
Merits and demerits of investing in Brent Crude Oil
Brent Oil is rapidly becoming the benchmark in the energy industry.
Crude oil prices are a reflection of global economic growth and other macroeconomic trends and factors.
Traders can profit from rising and falling oil prices.
Geopolitical events usually create opportunities for traders trading Brent crude oil.
Unexpected events can cause unexpected price fluctuations.
To trade crude oil, you need to understand a variety of trends and factors that may affect supply and demand
Price History of West Texas Intermediate Crude Oil
The price of West Texas Intermediate crude oil reached a low of $26.03 in February 2016. From 2011 to 2015, due to the start of production in the United States, the global oversupply caused oil prices to be under pressure.
When the price of West Texas Intermediate crude oil fell below $40 a barrel, more and more people speculated that many marginal producers would stop production. This has led to the accumulation of crude oil, and oil prices have risen quickly-we can see since 2016. From 2015 to 2018, the global economic growth was also stronger than expected, which led to speculation about the growth of crude oil demand. At the beginning of 2017, oil prices began to fall because people were worried that crude oil inventories were too high and there was not enough storage capacity. However, in April 2017, OPEC announced that they would extend the production cut for nine months-this restored the upward trend in oil prices.
Price History of Brent crude oil
The Brent crude oil chart is a good indicator of the magnitude of price changes, which usually fluctuate up and down. Before the outbreak of the financial crisis in 2008, global economic growth and China’s economic growth caused the price of Brent crude oil to reach as high as $140 per barrel.
After the collapse of global financial markets, concerns about the global economy brought oil prices to $36.61. Oil prices recovered as the market recovered between 2009 and 2011. Later, new oil and gas production in the United States caused prices to fall back to a low of $27 in early 2016.
With oil prices below $40, the hype by marginal producers to stop production has triggered a new round of bull market. Due to expectations that OPEC members will increase production, oil prices fell again at the beginning of 2017. However, when OPEC announced the extension of production cuts, oil prices resumed their upward trend again.
How to start investing in Oils on XM?
If you want to trade crude oil, the first step you can take is to pay attention to price movements and news about West Texas Intermediate crude oil, while understanding the interaction between the two. If you open a real or simulated account through XM, you can see the price trend chart and trade according to the quoted price. XM provides CFDs on West Texas Intermediate Crude Oil, so you can use leverage to go long and short.
Studying the historical data of Brent crude oil and the events that led to price fluctuations is a good way to understand how to trade Brent crude oil. If you use XM to open a real or simulated account, you can follow the price trend and view the reaction of crude oil market news to crude oil prices.