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Facts About Crude Oil that Every Trader Should Know

Apr 02, 2021 (AllAfrica InfoWire/All Africa Global Media via COMTEX) --

The commodity market has been attracting investors for the last many years, and commodity trading has become a source of finance for many organizations around the world. Corporates invest in commodity trading to manage the source of finance required to sustain the business. The investment in the commodity market is considered to be much less risky than other financial markets like crypto and forex.

Whereas the opportunities are wide open for small enterprises and individuals as well. The amount needed to trade in the commodity market is even less than $ 100. There are hundreds of commodities available on the commodity market for trade purposes. Among the most famous and profitable commodities are precious metals which include (gold, silver, copper), Energy which includes (Natural gas, Brent oil, crude oil) and agriculture-related commodities. Crude oil trading has been among the most profitable commodities and high rate of return with stabilized price speculation.

Traders who prefer oil trading, and looking for a legitimate platform, it would be recommended to trade with Oil profit. Facilities like Oil futures make it even more attractive, as it enables investors and traders to make a huge sum of profit with a small investment. There are some useful facts regarding crude oil trading that would help traders to get familiar with the commodity dynamics.

Crude oil composition differs from place to place

Crude oil is the result of animals and plants that were buried deep down the surface million years ago. Being a natural resource, it consists of hydrocarbon, sulfur, and oxygen. After the natural process, these compounds result in crude oil.

The extraction of such resources is done in multiple ways, every different way of extraction result in a different type of oil which is classified as light, medium, and heavy. How heavy or light crude oil is, depends upon the location and type of oil. API is a standardized measure to examine the lightness or heaviness of crude oil.

Five countries that dominate half of the global oil production

Oil-producing countries are generally developed and rich in resources, their economy heavily depends on oil fields and oil production. The five countries that hold almost 50% of the oil production, which makes more than 90 million barrels per day. The top position is held by the United States, then comes Saudi Arabia, Russia, Iran, and Canada.

The rest of the world is responsible for the other half of the oil production. For a trader it is important to know, these five countries hold the power to impact the supply and price of crude oil. News regarding these five countries would help a trader to invest at the right time with the right amount of funds.

Other factors that influence the crude oil price

There are certain factors that are not directly related to oil but holds significance in crude oil speculation. Historically the trend indicates that as the US dollar falls the oil price falls and if there is an increase in the worth of US dollars, the oil prices are most likely to rise. The reason behind this relation is the fact that oil barrels are priced in US dollars. This relation is valid in dollar terms.

There was a time when the US used to import oil, worth millions of dollars, and an increase in the oil price used to have an adverse impact on the balance of trade. Over the last decade, the US has become an oil exporter due to technological advancement and horizontal drilling techniques. Political events and crises also determine the price of the oil market.

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