Oil and gas business without investment. How to make money when oil prices rise

In the last six months alone, oil prices first fell by more than 30%, and then rose again by more than 20% - and savvy investors made huge money from all these movements.

At least worth knowing, how to make money on oil via the Internet and what assets and tools exist for this.

I will also show my personal example of making money from oil, which inspired me to write this post.

How to make money on oil online

To get real money, you don’t have to carry barrels of oil and wait for when and to whom you can sell them at a higher price. Now, when the economy is built on stocks, futures and other contracts, you can earn income from oil trading without leaving your home; all you need is a computer, tablet or even a phone. The main thing is the Internet.

You can make money on oil on the Internet from a refrigerator with a monitor).

To make money on oil price movements, you need to be able to predict them. To do this, you can use technical analysis tools: various patterns on charts, resistance levels and other graphical signals, or fundamental analysis: analysis of financial reports, financial and production activities of companies operating in this area, as well as information from various news.

Experienced investors try to use as many analytical tools as possible to improve the quality of their forecasts.

Usually it all starts with studying daily news from the oil market, which often already includes price forecasts.

Once you have mastered the skills of analyzing the oil market and making forecasts, you can choose one of the many instruments whose value dynamics are related to or based on changes in oil prices, and begin working with this asset.

How to buy oil online to make money

The most interesting, and in the future the most highly profitable method that can provide an investor with independent earnings on the Internet using oil, is trading derivative financial instruments in the derivatives section of the financial market.

Futures

Perhaps the most popular way to make money on changes in oil prices is by trading black gold futures.

It is the futures price that determines the price of oil, since these prices are used by oil producing, transport, refining and other companies.

Note that: A futures is a contract whose terms include the delivery of a certain amount of an underlying asset at a fixed price in the future.

The presence of leverage on the market allows you to start earning money with a minimal investment. For example, the guarantee for oil futures on the Moscow Exchange currently does not exceed five thousand rubles.

But futures are considered the most complex exchange instrument on the exchange. Fortunately for me and many others, simpler tools have been created using futures quotes. For example, contracts for difference.

Contracts for difference (CFDs) and earnings example

It is very easy to make money on oil via the Internet when trading CFDs, or, as they are also called, contracts for difference.

Everything is very simple here - you buy at one price and close the deal at another, and keep the difference for yourself. Leverage is also available here, which is why you can earn big money here.

For example, I who works for more than 20 years and provides an open platform for trading:

I selected the " Oil and gas", where I selected Brent oil and clicked " Open a deal". After this, a window with conditions opened:

I indicated only the amount and direction of the transaction Buy (In height). It was also possible to specify a loss or profit limit, but the last time I limited the profit, the trade closed automatically, although I could still hold and earn more.

This option is very good when you step away from the computer and don't want to take any risks.

After opening the trade, a few hours later I closed it with a profit of 137,35% or $164.82 profit:

A big plus for novice investors is that this contract can be traded in fractional shares, that is, you can purchase, for example, 0.1 contracts. This function greatly lowers the lower threshold for entering a trade. Minimum deposit to open an account on $200 , but transactions can be opened for any amount.

If you think that I made a very large profit, and this cannot be repeated, then look at another example. Here I kept the trade open for more than a week, but what is the result:

921.89% profit! I opened a trade for $80 and earned $737.51.

This is a very convenient and simple tool for trading, as there is a huge amount of assets from many world exchanges. For example, hemp (medical cannabis) stocks were recently added to the list.

Oil company shares

This type of asset is not entirely based directly on oil prices, but has a very high level of dependence on them, since the value of shares of companies such as, for example, Shell, BP, Lukoil, Total, Petrochina, Rosneft and many others, largely depends on oil prices, since the basis of the profits of such companies is operations with oil.

However, in this case, various internal factors, such as the effectiveness of management decisions, interfere with price dynamics.

This type of investment is less risky because the shares of such large companies, as a rule, are not subject to too strong and sharp price fluctuations, and their volatility is significantly lower than that of futures, options or contracts for difference. However, the profitability of such transactions is usually significantly lower. Even just because the leverage on stocks is 5 times less than on oil futures.

Purchasing such shares is more of a long-term investment than an opportunity to make quick money. The advantage in this case is receiving regularly paid dividends.

Binary Options

This type of asset is also used to generate income from changes in oil prices. I have already described this in various articles, so I will not repeat it here, but for clarity, I will show an example of making money from oil on the Internet.

It all starts with selecting the desired asset from the list.

An option is a futures contract because it has a transaction expiration date, so you need to specify the time when the option will automatically close:

It remains to indicate the main condition - whether the price will be higher or lower at the time the transaction is closed. I specified the growth condition - UP:

If after 8 minutes oil costs more than at the time of purchase, then I will make a profit, since the option condition will be fulfilled.

note, it doesn’t matter how much oil rises, by a cent or a couple of dollars, what matters is only higher from the moment of purchase.

The deal was automatically closed at the specified time. As a result, the price went up according to the option condition, which was fulfilled:

From investment $80 I managed to return $128 , including net profit $48 .

I work with a broker because I just like him. Of course it is reliable and has a regulator TsROFR, offers a lot of assets and good interest rates on transactions, but I also just like it.

Investment fund units

There are mutual funds whose diversified portfolios allow you to profit from changes in oil market quotes with a relatively low risk, since in this case the funds are managed by professional investors, and transactions with them are strictly regulated by the state. Moreover, the concentration of funds in the hands of the manager allows for proper diversification of the portfolio, which also reduces investment risks.

There are analogues of mutual funds - exchange-traded funds ETFs, in which one invests by purchasing their shares on the exchange. But price dynamics will not give the same huge profits as futures, you saw my examples above.

What determines oil prices?

The oil market is influenced by many factors, the impact of each of which cannot be taken into account. However, there are several fundamental points, the influence of which on market quotes is most noticeable and which must be taken into account when forming your forecasts. These include:

1. Geopolitical factor. The relationships of oil-producing countries with each other and with major consumers have a very serious impact on oil prices. Conflicts, especially military ones, the introduction of an embargo and a reduction in supplies can greatly adjust the price of black gold on the world market.
2. Natural disasters. Various types of natural phenomena occurring in oil-producing and oil-refining regions, capable of suspending the operation of enterprises or damaging infrastructure, can directly affect the volume of oil supply, so serious disasters in such regions are often regarded as signals to buy.
3. OPEC quotas. Changes in production quotas also directly affect the supply of hydrocarbons, so their changes, in most cases, are reflected in stock quotes.
4. Inventory size. A reduction in oil reserves in the world promises a shortage of black gold in a few decades, however, data on the exploration of new deposits or the depletion of existing ones can also affect the value of this asset on the stock exchange.

Conclusion

In the modern world, it is quite possible to earn quite a lot of money by trading oil on the Internet without leaving home. To do this, there is no longer any need to transport tankers or wagons loaded with hundreds of barrels of black gold around the world - you just need to have a computer.

There are many instruments, such as futures, options or shares of exchange companies, that allow you to make money on the oil market via the Internet.

If you like this idea or are just interested, then I advise you to try it so you don’t regret it later.

When oil prices hit record levels, it seems like not a day goes by without two or three people complaining about the cost of gasoline or heating oil. Indeed, rising prices are a source of concern—and sometimes anger—for everyone. Well, for almost everyone: While the rest of us are suffering from oil price hikes, some people have learned to make money from it, and it's not just oil company CEOs who are benefiting from it. Here we will tell you how to get your share during the oil boom.

Steps

Be careful. No matter what you invest in, you need to make sure you have the right information before making a decision. You should start by reading the Prospectus Directive, but don't stop there. Due diligence is the process of reviewing the terms and conditions before purchasing shares, which includes reviewing reported return on investment data, understanding the terms of the investment, and analyzing its future potential. While no one knows what an investment might bring in the future, you can make a better guess by being well informed.

Calculate your risk appetite. Every investment involves risk or uncertainty, but there are some projects that are especially risky. Each individual should choose where and how to invest based on his or her risk appetite, which should be dictated by his or her age and financial situation, diversification of securities holdings and personal preferences. A young person who has just started investing certainly has more risk than a pensioner because a pensioner needs a stable income, while a young investor may already have a stable income and wants to make a profit on his invested capital. In addition, if you have a broadly diversified portfolio, you will be more risk-tolerant because you will only lose a portion of your overall portfolio if your investment goes wrong.

Open a brokerage account online or at a local brokerage firm. Most of the following investments should be made through a stockbroker or an online brokerage account. Whether you use the services of a broker or do it yourself is up to you. The broker usually requires a large commission, but from him you can get advice and strengthen your personal relationship. Online brokerages vary in their level of customer service and assistance, but may be suitable for some investors.

Weigh your options. There are many ways to benefit from high oil prices. Some of them are listed below for your convenience. The list shows the progression of the likelihood of investment risk, ranging from theoretically high risk to low risk investments, although in fact, the risk associated with each type of investment will depend on the time frame and the specific stock, fund or location of your investment. Summarizing risk factors is not a substitute for checking the financial integrity of the project in which you are considering investing.

1. Buy an oil well. Obviously, if you own an oil well, your income will increase as oil prices rise. Of course, before purchasing such assets, you have to consider many ongoing expenses, and there will also be some unknowns. Wells that have oil in their depths are essentially inexpensive, those that have proven reserves are usually not sold, and those that are traded on the market cost incredible amounts of money. In addition to productive wells, you can sponsor well testing or invest money in the creation of a new oil production company, but such investments are much riskier than they seem. You will need a pretty decent amount of money and nerves of steel to be part of this business.
2. Buy oil futures. Crude oil is a commodity futures contract that is traded in the commodities market. The market has developed a number of complex financial instruments, but the most common are futures contracts, in which the buyer acquires the obligation and right to sell a specified portion of a commodity at a specified time in the future. Buying oil futures essentially involves guessing whether the price will rise in the future, so it is quite risky.
3. Invest in a commodity-traded investment fund. Commodity ETFs are similar to index funds, which track the prices of one or more commodities. As is the case with futures, buying them is risky and everything depends only on jumps in commodity prices. An example of a commodity exchange-traded fund (ETF) that tracks oil prices is the USO (United States Oil Fund).
4. Buy oil royalties. Oil royalties provide shareholders with payments to repay a loan as taxes levied on one or more oil production operations. Loan repayments are more commonly referred to as “dividends,” although they are technically different from dividends and in the US must be filed on separate tax returns, which can be hefty: up to 30% or more each year as an investment. Unfortunately, these amounts are difficult to predict, since the extraction of natural resources is subject to all sorts of doubts, not the least of which is that the deposits may be depleted. Examples of royalties in the United States are PBT (Permian Basin Royalty Trust); BPT (BP Prudhoe Bay Royalty Trust) and TELOZ (the TEL Offshore Trust). There are even more in Canada, including PWE (Penn West) and HTE (Harvest Energy Trust). An additional benefit of owning royalties, compared to dividend stocks, is that loan repayments are often made monthly.
5. Buy shares of leading players in the market. There are only a few large oil companies that are publicly traded, they produce most of the world's oil and their shares are usually quite expensive, so you don't have to worry about demand for them going up and down very often. If you're looking for something a little riskier (and probably more rewarding), consider buying shares in companies that provide major oil companies with specialized equipment and research work. Some of these companies are quite large and invest their own capital in expanding production, but many engineering and technology firms have to enter into contracts for new technologies. Or they might just go bankrupt.
6. Buy shares of oil transportation companies. These are companies that own oil pipelines (such as Constellation Energy in the US) or tankers (these are Frontline Ltd. and Nordic American Tankers - both companies are based in Bermuda). Firms like these can pay large dividends, and their share prices are usually linked directly to oil prices.
7. Buy shares of an alternative energy company. Ultimately, oil prices, which are rising by leaps and bounds, will make alternative energy sources much more attractive. If you want to be prepared for this eventuality, or if oil investments leave a bad taste in your mouth, you can invest in companies that develop, design and produce alternative resources to oil. Since it's hard to say what the fuel of the future will be, and even harder to say which companies will find a way to use it, it's like Russian roulette. Ironically, the oil majors are the biggest players in alternative energy development, so they can't be ignored if you want to make a profit in this growing business.
8. Buy shares of major oil companies. The seven largest companies control most of the world's oil sales, and their shares are benefiting from record oil prices. Moreover, these companies are large and wealthy enough to withstand a sudden drop in oil prices. While these stocks are valuable, they won't make you rich overnight. When you buy smaller oil stocks, you draw a little more (and can get more) - this is for the most adventurous investors.
9. Invest in a mutual fund that holds shares in an oil company. Many mutual funds hold shares of at least one or two oil companies, and many also hold shares of the leading players in the market. You may think that investing in a mutual fund is too much of a stretch when you're better off getting it all by investing in a fund with better management and better performance, but if you want to get rich without taking any risks, a mutual fund is the way to go. whatever suits you.
10. Use less oil. The most important thing now is to reduce your dependence on oil. Drive less often, use public transport, buy a fuel-efficient car and start saving energy at home - this way you can get rid of the heavy burden of worrying about rising prices. Of course, you won’t create capital from this, but remember: a penny saves the ruble.

1. Invest your funds as part of a diversified portfolio. It's old advice, but we can't stop repeating it: the surest way to make money while protecting yourself from a volatile market is to diversify your investments as much as possible. Don't put all your eggs in one basket.

   • Remember the aphorism: “Bought low, sold high”? Oil prices are booming right now, hence everyone wants to grab their share. But will they stay high or fall? No one knows this, but don’t be lazy to draw your own conclusions before investing money. One good rule of thumb is if Wikihow has released an article on investing, it means the market is already oversaturated and it's time to sell.
   • If you're looking for a way to hedge your stock holdings through commodities, oil isn't the best choice. If the economy slows down, demand for oil will likely fall and oil prices will fall along with your stocks.

   Warnings

   • Do your research. Don't just listen to the advice of others, including your investment advisors. In most cases, if you end up losing money due to inaccurate information, you only have yourself to blame.
   • This article was written for general information purposes. Do not make investment decisions based solely on this information or any other source of information.
   • Learn about the tax implications of certain types of investing. Nobody likes paying taxes, but the tax consequences of complex financial transactions can be extremely complicated.

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Oil is one of the most popular commodity assets, which is always at the peak of traders’ interests. This is both an interesting and complex asset, and those who understand the topic make money from oil trading.

Today we will take a “full immersion” into the topic and try to tell you everything you need to know to start trading oil, including the Forex market. How did the oil markets arise, how will things be in the future, how effective is the developed toolkit, where and how to start trading oil for a simple trader, what strategies and tactics can be used for maximum profitability on the movements of “black gold”, and also which brokers are better trade this asset – we will talk about this in this article.

What types of oil are there and how do they differ?

Oil produced in different parts of the world is very diverse in its chemical composition and properties. In order to somehow classify oil and build a pricing mechanism, special markings were invented: oil was divided into standard (best, marker) grades and all others.

Marker grades of oil They came up with the idea of ​​making it easy to set prices for other exported varieties of this mineral. Such varieties in Russia are Urals, Siberian Lights, REBCO, Sokol, Vityaz and some others.

The reference varieties of “black gold” are those that have a special composition. In this particular case, the determining role is played by such parameters as the sulfur content in it, as well as density. Today there are 3 main reference-type varieties sold on the market. These are primarily Brent and WTI, and sometimes Dubai Crude is also included in them. Quotation organizations regularly publish quotes for these varieties.

• Brent oil (Brent)- mined in the North Sea. It is intended for the European and Asian markets. The cost of more than half of the sold grades of “black gold” is determined based on Brent quotes;
• WTI oil (Double-ti-ay)– intended for the western US. It is also used as a measure for other types of “black gold”. For a long time in the last century, WTI was considered a unique reference variety;
• Dubai Crude oil– it is often used to determine the value of “black gold”, which is exported from countries located in the Persian Gulf and the greater Asia-Pacific region.

As a rule, marker grades are tied to certain deposits or to entire groups of them, the “black gold” of which has identical characteristics and is sold on markets with good liquidity.

The traditional WTI grade is light oil, which is produced in the USA in the state of Texas. Its value is used to calculate the cost of other types of oil that is produced in the United States, as well as to determine the cost of a particular type that is imported into this country from abroad.

The Brent grade, which is mined in Europe, has good density and provides a high concentration of a substance such as sulfur. Brent was initially mined in the UK. Then the geography expanded and this variety began to include raw materials that were also mined on the territory of the Norwegian islands. Now Brent is the most accurate marker of the global price of “black gold” over the last period.

Oil price and asset value charts online

The exchange rate (price) of oil is the spot price of one barrel of this mineral reference grade. Based on the price of marker grades of oil, prices for all other, so-called export grades are formed. In stock trading, as a rule, the term “quote” is used to refer to the price of oil.

Prices for marker varieties are determined on major world exchanges. So Brent is traded on ICE, and WTI on NYMEX.

In order for everyone to understand what kind of oil is sold on the exchange, international designations were introduced. There are many of them, here are just the main ones:

UKOIL– the price of Brent crude oil, expressed in US dollars
USOIL– the cost of WTI oil, expressed in US dollars
BRN8– Brent futures (N – contract number, 8 – delivery year)
XBZ– CFD contracts for Brent oil

Now, having seen the stock quote, USOIL=71, you will know that the price of WTI oil is now $71 per barrel.

Oil prices are a key factor influencing the stock markets of the world's largest oil-producing countries, including the USA and Russia.

Online WTI oil price chart

Brent oil price chart in real time

How can an ordinary person trade oil?

With the advent of futures, almost everyone has the opportunity to invest in black gold and make money on changes in its price. Now all you need is a PC or phone with Internet access, and you can become an oil investor or trader. To do this, you need to register with an online broker that provides access to oil trading and make a transaction. Of course, if you want a transaction to make a profit, you cannot do without a comprehensive analysis of the market situation, because you need to correctly determine the direction of the price of oil in the future.

Let's see what options individuals have to make money on oil.

Oil futures.

There are plenty of people who want to make money by buying/selling oil. But few people would want to do this if they had to come, for example, to Kuwait, fill a tanker with full tanks of crude oil and then transport it to the other side of the world to sell it to a potential buyer. Agree, it’s a costly endeavor, both in terms of time and money. Therefore, oil futures were invented - purchase/sale contracts that will be executed in the future at a price set now, and fully correspond to the movement of prices for real oil. By purchasing such a contract, the buyer actually becomes the owner of a certain volume of oil, but he does not need to physically transport and store it. At any time he can sell the futures at the current price on the market.

Now almost all world oil trading is futures trading, with the only difference being that for companies these are delivery futures, and for traders - settlement ones.

Let's explain: delivery futures - an obligation to physically deliver an asset (in this case oil), settlement - it is necessary to fulfill the obligation only in monetary terms.

Oil futures are traded on specialized futures exchanges. Recently, the instrument has become increasingly popular and not only economic giants such as the USA and Europe have entered into trading, but also those catching up - Asia, the CIS, and the countries of South America.

Only settlement oil futures are traded on the Russian market. Trading on them takes place on a monthly basis and has the following features:

• at any moment there are 6 futures contracts trading on the market;
• the easiest way is to buy/sell the contract with the closest maturity (for example, in October the November futures will have the greatest liquidity), but at the same time it will also be the cheapest;
• The completion of circulation of the last available contract (its expiration date) occurs in 6 months.
• the closer the futures expiration, the lower its value (the difference in price between the nearest 1st and last 6th contract can be 6-9%).

Unfortunately, there are no supply contracts on the Russian market.

Where can I buy: Today, the main trading in oil futures is conducted on the following exchanges:

NYMEX– New York Commodities Exchange
ICE– Intercontinental Exchange
CME– Chicago Exchange
LME – London Metal Exchange
SGX– Singapore Exchange
MOEX – Moscow Exchange
SPB– St. Petersburg Stock Exchange

How to buy: for Russia – on the derivatives market of the Moscow Exchange. Futures exchanges do not deal with individuals, so you will need to register with a broker that provides access to trading. Here is a list of brokers working with MOEX.

What amount is needed: The minimum you can purchase on the exchange is 1 lot, which is 10 barrels of oil. We consider: 1 barrel at the time of writing is equal to 83 US dollars, which means the minimum amount required for investment = 830 USD.

Forex and CFD oil contracts

Purchasing oil futures through an exchange broker is associated with a number of difficulties, such as a complex registration and verification procedure, and a fairly high minimum purchase threshold (10 barrels). A simpler option for the average trader is to buy futures on the Forex market or CFDs.

Advice: For novice investors, it is better to buy not the futures itself, but a CFD contract on the futures price.

Trades in "black gold" on the Forex trading platform are carried out in almost the same way as transactions using currency. Here you will also find the usual selling price, buying price and, of course, the spread. The only difference between them is that oil and currency have different “leverage” and margins. For example, one contract for a commodity trading operation can be equivalent to ten, a hundred, a thousand barrels. They must be valued in dollars.

Contracts for Difference (CFD)– analogous to oil trading on Forex, but has the advantage of being able to flexibly adjust leverage. Read about the advantages and disadvantages of CFD.

Where can I buy: forex brokers providing the opportunity to trade oil. Among the reliable platforms for Russia and the CIS, we can recommend Alpari and Roboforex. Both platforms have been operating on the market for more than 10 years and have a guaranteed high quality of services.

How to buy: open an account with a broker, download the MT4 or MT5 trading terminal, make a deposit and open a deal to buy oil.

What amount is needed: here you can start with a more modest starting capital, thanks to the use of leverage provided by the broker. The average deposit of traders in commodity contracts on Forex is about $300.

Binary options are also a good option for beginners who want to make money on oil. And that's why:

• Binary options are the simplest type of trading. Here you only need to guess the direction of the asset price movement.
• Binaries have the lowest entry threshold in terms of deposit and transaction amount. You can start trading black gold with literally $10 and bet $1 for each trading session.
• As a rule, BO brokers do not have a spread.
• You can earn a lot and quickly. Unlike exchange futures and forex, where you need to wait for contracts to expire and timeframes to complete, here you can set a period of several minutes. Upon completion, if your prediction turns out to be correct, you instantly receive a profit equal to, in some cases, up to 70% of the bet.

However, you need to understand that the risks also increase here.

Example. The oil price is currently $70.00 per barrel. You bet $100 on binary options that the price will fall in the next 3 minutes. At the end of the specified time, the price of oil was $69.99 per barrel. Your prediction turned out to be correct (no matter how much the asset price fell) and you get your bet back plus 70% (conditions Broker Finmax) from the bet amount, i.e. another $70. And this in 3 minutes!

There is another important point here. The binary options market is simpler than the Forex and stock market from a technical point of view, which has led to the recent emergence of a large number of unprofessional and even outright fraudulent companies in this area. To put it simply, there are dealers who simply want to “swindle” gullible clients. If you go to such brokers, there is a 99% chance that you will lose your money. Therefore, you should carefully choose a broker for trading on BO. There are worthy companies on the market that have confirmed their reputation with time and feedback from traders.

We can recommend binary options brokers for trading commodity assets (including oil). This company has been on the market since 2015. It has a reliable Russian (not offshore!) regulator - TsROFR, which guarantees you the protection of your interests in the event of a controversial situation. The broker guarantees instant execution of orders. Most reviews are positive. We ourselves have tested almost all BO brokers and Finmax is truly one of the best.

How to start trading?

Let's look at the trading process using the Finmax broker as an example. Everything is extremely simple. First you need to go through.

Lifehack! There is a private condition for our clients at Finmax: you can conclude one trial transaction. If your prediction turns out to be incorrect, the money will be returned to your account. Such a risk-free Trade will allow you to understand the principle of how options work and start trading oil without fear of incurring a loss.

Then open a real account, fund it and act step by step (see image below)

"Black gold" from brokers

Now the price of oil is closely monitored even by those who are only familiar with trading on the stock exchange by hearsay. This is explained by the dollar exchange rate being pegged to oil. In general, oil trading volumes have a general volume standard of 1 thousand barrels per 1 contract created. If you look beyond Forex, then any volumes appear there, which are calculated even in train cars.

Trading time

Trading hours for “black gold” via Forex start on the first day of the week at exactly 1 o’clock GMT. They end on the last working day of the week, at 10 pm. Moreover, this rule applies to trades in which both American oil and “black gold” from the UK participate. However, there is also a slight break. It starts from 23 pm GMT and ends at 1 am. At the same time, absolutely every contract has a certain expiration date. When it comes, contracts that have not been closed are closed automatically. As for open orders, they are cancelled. If you need to start trading again, you will have the opportunity to open more positions. They will be calculated at the current exchange rate. They will have a different expiration date.

What do oil prices depend on?

Various factors can affect changes in the price of “black gold”. Let's try to look at each of them separately.

1. Natural. In order to carry out effective trading over a long period of time and take good positions in the market, it is necessary to correctly calculate the volume of “black gold” deposits in a particular region. It is also necessary to determine the approximate time when they will be depleted. It is also important to take into account the climatic background. Thus, due to global warming, the volume of purchased oil may significantly decrease.
2. Geopolitical. This factor implies the existence of specific agreements that countries have concluded among themselves. Consortiums of oil producers also play a huge role. Moreover, the cost of “black gold” is highly dependent on geopolitical tensions. Unfortunately, huge oil deposits are located in regions where military conflicts often occur. A striking example of this is Iraq, Libya, Sudan, and Nigeria.
3. Crude oil reserves. Data on reserves of “black gold” in a particular state are often leaked to the media and can radically change the existing course.

How friendly are the US dollar and oil?

In the process of trading “black gold” you cannot do without the use of American currency. Each transaction is concluded in US dollars. This is not surprising. After all, it is much more convenient to pay with them than with other currencies. Otherwise, traders and exchange trading players would be forced to make unnecessary transactions.

Currently, oil is regarded as a self-sufficient currency. In this case, all existing national currencies are equal to the US dollar. And he, in turn, is strongly attached to “black gold”. That is, changes in the price of oil are instantly reflected in the dollar exchange rate and the national currencies of other countries. The euro is also sensitive to such fluctuations.

Volatility

Over the past fifty trading days, “black gold” has shown daily average fluctuations in the range of 1 to 2%. This figure is significantly lower than last year's result. If you check the averages, which date back to 1983, you can see that from the beginning of 2015 to the beginning of last year, prices were almost close to the lowest minimum. And daily fluctuations in volatility reached approximately “plus” or “minus” 4%.

In other words, today volatility in the markets where “black gold” is traded is moderate. However, it is not immune from modification. The geopolitical situation in the Middle East and South Korea may make adjustments. Also, the dynamics of the productivity of the AMG, Eurosceptic sentiments, and the policy of the US Federal Reserve can play a significant role. The latter is regularly enriched with capital from markets that are only at the stage of development. Once again, it is worth recalling that, based on historical experience, the volatility of the price of black gold in average daily terms may remain quite high.

What strategies should you use to trade oil?

As for the main indicators that traders use when trading “black gold”, they are as follows:

o Bollinger Bands;
o MACD;
o RSI;
o Stochastic.

However, you can also use such an addition as the time-tested Price Action. It analyzes candlestick patterns, directions and strength of trends, determines support and resistance levels. At the same time, it studies trend lines, chart patterns and, in general, improves your trading. Moreover, the “black gold” charts have one distinctive feature. They reflect protracted long-term trends, which are characterized by a small number of rollbacks and false takeaways.

The so-called . It is great for trading various commodities, as well as futures. It is the latter that are the most effective trading solution when working with “black gold”. So, VSA is full of new features that will be very useful for traders when making oil transactions. However, VSA is renowned for its excellent ability to forecast and identify leading market trends.

Any energy carriers, like other product groups, are directly influenced by seasonal factors. Just in case, it is worth recalling that seasonality is a combination of various events that lead to an unpredictable increase or decrease in the prices of underlying assets during the period of time under study. Some traders take these factors into account when creating their own strategies.

Considering that “black gold” is a source of energy, its sales increase significantly in winter. That is, when it gets very cold in North America. By the way, recently this pattern has been reminding itself with enviable regularity. Meteorologists even had to use a special term. In this case, we are talking about the polar vortex. They gave this name to a climate phenomenon that exposes the Great Lakes to severe frosts. Often this impulse is recorded in months such as January and February. It is valid until March. All this applies to fuel oil. After all, it is they that are used to heat private houses and industrial buildings. Electricity is also produced from fuel oil. Do not forget that in winter the nights last longer than in summer.

This is followed by a characteristic decline that lasts until the onset of summer. When the weather is favorable, the vast majority of people go on vacation and, consequently, the cost of gasoline increases. At the same time, until September, oil prices also increase. After which its value drops sharply. But not for long. With the onset of the new year, it rises in price again, regaining lost ground.

Such price fluctuations can be explained by several factors. First of all, people are starting to buy less fuel, because the driving season is behind us, and the main work in the fields has already been completed. Hot summers also contribute. To escape the heat, consumers use electricity for air conditioning. As for generating companies, they are starting to use gas instead of fuel oil. Since the latter in the USA is not very expensive and complies with current environmental standards. At the same time, there is a consistently high level of supply for “black gold” and petroleum products. Indeed, in the summer it is much easier to extract the necessary raw materials from the subsoil and transport them. This is especially true for the Northern Hemisphere.

On the other hand, it would be a stretch to call demand elastic. It is influenced by the dynamics of global economic processes. Therefore, it is not surprising that many industries primarily store manufactured “products.” In other words, energy resources are simply pumped into special reservoirs. This can be clearly seen in fifteen-year, twelve-year and ten-year data. But for nine- and seven-year-olds the picture looks less clear. This is due to the influence of recent years.

However, some seasonal trends in one form or another still persist. With their help, you can choose the right direction for making transactions. In other words, if long-term patterns run counter to the technical component, then it is more rational to ignore speculative operations. And vice versa.

As mentioned above, the changing mood of traders, specific factors, the cost of different markings of “black gold” or products made from it may not coincide with each other. Such dissonance between the prices of similar assets is usually called “intercommodity spread.” It is necessary to take into account the fact that this term does not determine the usual difference between ASK and BID. By the way, data on these quotes can be found in the toolkit specification.

The situation on the oil market today and the trend for the long term.

Once Myron Watkins, who was an excellent expert in the field of economics and worked at the world-famous New York University, said that one of the problems with oil is that there is always an abundance of it, or, conversely, negligibly little. Oh, he was so right. Especially, his statement is relevant in recent years. World markets are faced with excessive supply, and OPEC member countries are forced to seek a compromise and significantly limit the production of “black gold”. They do this in order to stabilize costs and gain precious time to implement a whole package of extensive reforms, without which this industry simply will not survive in the future.

Recently, the cost of producing shale-type “black gold” in the United States has dropped to $20 per barrel. In other words, it has become equivalent to the price of extraction using the traditional method. First of all, the current trend is explained by the fact that the technology for extracting shale raw materials is constantly being improved. For example, in 2012, the cost of extraction using this method reached $100, but last year this figure was reduced fivefold.

Today, the most cost-effective extraction of “black gold” from the bowels of the earth is carried out in a state such as Saudi Arabia, as well as in Iran. If we talk about the Russian Federation, then existing deposits require the extraction of raw materials from the bowels of the earth at a cost of six dollars. At the same time, those that have not yet been explored require a different figure - 16 dollars.

Raw “black gold” WTI rapidly increased in value after the end of the 1st World War. It reached its maximum in the twenties of the twentieth century, and then moved sideways. It was only the embargo in the seventies that provoked a parabolic rally, which remained stuck at $120. WTI oil reached its peak in the early seventies, after which it began a tortuous decline that lasted until the early two thousandths. It was then that international business activity experienced a severe decline.

As a result, “black gold” reached its highest price levels in the summer of 2008 and froze at $144 per barrel. But by 2010 it was trading in the range of $70-130. It remained in this value segment until the “equator” of 2014. Then there was a powerful decline. As for today, WTI oil is sold in the range of $45-46 per barrel. Nowadays, the main problem of the oil market is the overproduction of raw materials. It was triggered by insufficient global demand and increased shale production in the United States. All this led to a decrease in the cost of “black gold”. The lifting of sanctions once imposed against the Iranian authorities also added fuel to the fire. As soon as they were abolished, prices for Brent oil fell to almost $27.70 per barrel. Thus, the thirteen-year minimum was updated.

Exporting countries have no choice but to solve this problem by reducing quotas for the production of “black gold”. But this is only a temporary measure that reduces the symptoms. It is necessary to look for other tools to solve the current problem. Otherwise, oil overproduction cannot be avoided in the foreseeable future. It is possible that now only a gradual improvement in global economic processes, industrial activity and demand from buyers can create a favorable climate for increasing the price of oil.

However, for successful oil trading, you must have certain knowledge and extensive experience. Moreover, you need to keep your finger on the pulse of the market all the time and always follow the news that comes from different areas.