Crude Oil Prices & Investing

Step 1: Download Metatrader 4

Getting familiar with crude oil trading via a demo account allows a virtual experience without risking capital on Metatrader 4, also known as MT4, the world’s most popular trading platform amongst traders and gaining access to a wide product range such as indices, currencies, shares and commodities.

Step 2: Open Demo Account

Start trading crude oil & Open Demo Trading account with ATFX, a globally regulated broker that’s been ranked 3rd on Finance Magnates’ largest retail broker list based upon traded volume on the MT4 trading platform. Invest in crude oil trading commodities today and join in the action of crude oil investing.

Step 3: Begin Crude Oil Trading

The traditional method of investing in crude oil is to enter the market for crude oil trading and buy a derivative product such as options, futures, or through an exchange-traded product like ETFs for Brent Crude Oils and West Texas Intermediate Crude oil (WTI).

Futures: Predicting oil price movements in the future

Spot: Trading the current market price for oil

ETFs: Tracking the performance of oil through exchange-traded futures contracts

Options: Taking opportunities with active volatility

Single stocks: Gain an advantage by taking a long or short position on oil companies

Stocks: Buying shares or going long or short on oil companies & receiving dividends in return.

Crude oil is defined as a mixture of hydrocarbons that exists in liquid form found in underground reservoirs, otherwise known as petroleum. Due to the atmospheric pressure during this particular phase, it remains in liquid state after extraction. Apart from electricity and heating, crude oil is vital for transportation that involves a combustion engine, along with an array of oil-inclusive products.

Our modern world has become increasingly dependent on oil as it’s primary source of energy production and the liquidity it generates. Commonly referred to as “black gold”, crude oil can be used for anything made with plastic because it sits at the very base level.

Investors tend to trade in oil because it has an attractive dividend income along with high volatility and share price appreciation.

Crude oil price fluctuations are largely attributed to decisions made by the Organization of Petroleum Exporting Countries (OPEC) relating to levels of production. Political tension too tends to increase the volatility of oil prices.

Another key market moving factor for prices are crude stockpiles, played out by weekly investor speculation which eventually forms the equilibrium between supply and demand. In cases whereby this becomes non-existent, an excess in supply occurs and a fall in crude oil prices is observed.

Looking at Goldman Sachs projected rise for crude oil prices with forecasts reading up to $90, gas prices do indeed shoot up over increased demand and lowered supply.

Oil prices jumped over 80% in 2021, and whilst Brent Oil heads towards the $90 level it is currently above the $80 mark, hitting its peak since 2014. As the price of Oil surges, the American Petroleum Institute(API) and Energy Information Administration(EIA) have been reporting significant draws in U.S. crude oil with stockpiles hovering near 3-year lows.

Investor behavior towards crude oil prices is considered bullish throughout these several months, especially from Goldman Sachs' financial year projection which revealed upsoar to $90 per barrel of crude oil. In hindsight, the most significant force that speared up the prices of oil during this period in fact was due to increment of airfares along with a less than average performing economic outlook.

Bank of America’s forecast read that global crude oil could hit $100 per barrel come 2022 resulting from rebound travel. This surpasses expectations set by Goldman Sachs who prepared the mid-year forecast based on the price of $80, which before had similarly been accurately predicted using historical crude oil prices.

Output disruption might be able to correct crude oil prices over the long term, yet this notion is subjected to the willingness of OPEC+ to remove sanctions previously placed on Iran. Bank of America cautioned about the reemergence of Iranian oil barrels in markets due to a potential pull back driving oil prices down from the clouds.

To provide some context for critical technical analysis performed on crude oil trading, prices were observed to reach a three-year peak weeks earlier, due to preceding output disruptions that included two hurricanes in the U.S. driving its crude oil stockpile levels to near a 3-year low. These are in addition to large banks producing bullish forecasts upon the primed commodity.

The crude oil trading market has been seeing an uptrend throughout 2021, creating concerns amongst investors of an oncoming inflation. By observing the chart below on Brent (daily frame), Brent has surpassed $80 in such a short amount of time signifying intense volatility.

To identify an accurate direction to any asset or commodity, we need to look at the assets historical pattern, in this guide we need to skim through oil price history to assess the capability for it to follow the uptrend it is expected to follow.

Historical charts are very valuable to technical analysis, because financial instruments and commodities tend to follow patterns on the chart through past price action. However its reliability may vary due to frequent updates provided by market news reports. Certainly they are measurable and they will give you an idea of where markets could be heading. Traders use historical patterns to identify entry and exit signals.

The more used you get with past price patterns, the better you will be at spotting them as they happen again. Historical price patterns affect the current price action, they show you areas where breakouts happened in the past and if markets are truly bullish or bearish. Making trade decisions can be hard and your psychological state is actually on the list for risk management, so historical patterns can boost your confidence and give you an idea of where to start.

Crude oil is attractive to both day and long term traders, as the energy sector in global financial markets carries heavy liquidity and volatility. Hence allowing traders to take advantage of different opportunities. And despite demand fluctuations, it has a high profitability rate.

There are also different varieties of this particular industry to invest in, for instance you have the choice of refinery companies, exploration or drilling and distributing companies. Oil is also a primary source of energy and will continue to be useful long term.