Energy Products Trading
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At AvaTrade, you can enjoy many advantages when you trade crude oil CFDs. For starters, you get to trade the price movements of the underlying asset, without taking ownership of that asset. You have greater flexibility to trade the financial markets whether you’re buying or selling the underlying instrument.
If your analysis indicates that the price is likely to go up, you may buy, or if you believe the price is likely to move lower, you may sell. You can determine your profits by trading CFDs and benefiting from the differences between the buy and sell price.
You can also take a short position with CFDs. This means that you would sell at a specified price with the intention of buying back that asset at a lower price in the future.
Multiple global exchanges are involved in oil trading. Here is a listing of these exchanges and their trading hours (GMT time):
|Exchange||Trading Hours (GMT Time)|
|CBOT||00:00-12:44 & 13:30-18:14|
Petroleum: What Is It?
Petroleum, or petrol is also known by its global name – crude oil. It is a fossil fuel which is formed from bacteria, algae and plant remains. Over millions of years of extremely high heat and density, these fossils were transformed into carbon-rich resources which form the basis of fuel and related products.
Petroleum is a fusion of paraffin and hydrocarbons. Sometimes, cycloparaffins and aromatics are included. Petroleum is readily available near the surface of the earth, or deep within rock strata. When petroleum is mined and sent to a refinery, these petrochemicals can be used to form a multitude of products.
Sulfur, hydrogen, oxygen, and nitrogen combine with 80% carbon compounds to form crude petroleum.
Demand By Oil
Transportation: the road transportation sector is responsible for the majority of oil consumption, according to the World Oil Outlook (W00). In 2015, this figure was responsible for 45% of global demand, and is likely to remain that way until 2040.
The construction and mining industry is the second largest contributor to oil demand. It includes cement, iron, steel, and glass production. The importance of construction and mining will gradually diminish as we move towards a service-oriented economy.
Agriculture, residential demand, and commercial demand for crude oil amounts to 11% of global demand. Demand in this industry will likely not change for the next 2 decades.
Over time, crude oil demand will remain high with the aviation industry. An estimated 5.3 mb/d of electricity generation is expected, with long-term prospects likely to slow down.
In time, China will likely have an increased appetite for crude oil. Close in tow is India which is one of the world’s fastest growing economies in terms of its consumption of crude oil. More cars in India translates into greater demand for crude oil and petroleum. Much the same is true in Brazil, which remains at the forefront of the global chemical market and the production and manufacture of polyethylene.
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Energy CFDs and Oil CFDs at AvaTrade
What Factors Influences the Price of Crude oil?
A myriad of factors impacts oil prices daily. These include speculators who bid on oil futures contracts. These contracts are agreements that give traders the right to buy oil at a set price. Buyers and sellers determine delivery dates in the future, at a pre-set price.
Multiple factors need to be considered, including the following:
The EIA (Energy Information Agency) determines the estimates for oil demand. Several factors need to be considered, such as seasonal considerations. When demand increases, prices rise.
US Shale Oil and OPEC supply are analysed to determine oil supply. When supply rises, prices drop.Access to future supply: This depends on oil reserves in the US refineries, and the world. These reserves can be retrieved easily if prices get too high.
Future Oil Supply
Future supply is dependent on oil reserves in global and US refineries.
Geopolitical uncertainty can cause oil prices to rise. Natural disasters, famine, disease, oil spills, or floods can limit oil supply.
AvaTrade offers many tools to help newbies and professional oil and energy traders. These resources include Automated Technical Analysis, Autochartist and trading Educational Tools. UK Traders will have access to daily updates, customer support, and dedicated account managers. Thanks to the power of AvaTradeGO trading app, you can take your trading on the go, wherever you are.
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