Private side of Oil Trading By Dino Awadisian
Dino Awadisian with Energy Trading International a private trading firm said, Crude oil trading has been used since ancient times but the invention of the internal combustion engine and the growth of the automobile industry saw its value rise.
By: ET Oil Inc
Dino Awadisian with Energy Trading International a private trading firm said, Crude oil trading has been used since ancient times but the invention of the internal combustion engine and the growth of the automobile industry saw its value rise. Once a way was found to extract the oil at a viable rate the market grew, encouraging traders to speculate on oil prices. Today, crude oil trading is the basis of a global industry that encompasses its extraction, refinement and economic consumption, providing employment in many industries. Crude oil is used in the production of numerous chemical products such as plastics, fertilizers and solvents and is essential in maintaining our modern lifestyles. As a result, despite concerns about oil being a non-renewable resource many countries depend heavily upon it.
Since significant oil reserves are found in only a few countries, the market price of crude oil can be affected by national and international politics. Any change in major foreign policy needs to be considered by traders, along with economic factors, when trying to predict future oil prices. One recent example is the United States war in Iraq said Mr. Awadisian.
Crude oil is traded in barrels against the US dollar, and access to the internet enables traders to buy and sell hundreds of barrels of oil in a transaction through the MT4 trading terminal or any other in house developed trading platform. Similar to forex trading markets247.com charges no commission to customers that engage in oil trading; besides the spread between the buy and sell rates.
Facts regarding Oil Trading
Oil is essentially a form of energy.
A trader in the oil market must be fully aware that demand is often limitless while supply is always inadequate.
Knowing and understanding about the supply and demand of crude oil is critical when trading oil.
OPEC oil producing countries such as Iran, Nigeria and Venezuela are reaching peaking point of their oil production.
In non-OPEC countries such as Mexico and others in the North Sea, the oil production is nearing the peaking point too.
A fact states that oil production will continue to peak in the near future however eventually.
The oil supply will decrease while the demand will tend to rise increasingly.
Crude oil can be defined as a combination of naturally occurring hydrocarbons.
The mixture is refined to generate diesel, fuel oil, jet fuel, gasoline and kerosene.
Diesel – traded as Platts ULSD Diesel 10ppm CIF North West Europe (NWE) or CIF Mediterranean
Fuel oil – mostly traded as Platts 1% or 3.5% sulphur content fuel oil.
Jet Fuel – generally Platts Jet fuel CIF NWE. In Asia this is referred to as Jet Kerosene and trades as Platts Jet Kerosene
Depending on the content and origin of the crude oil, it is named individually and is categorized according to each ones measure of gravity (API). The API can represent heavy or light crude. If it is light, it will create a higher yield of valuable gasoline more than heavy crude would.
The sulphur content of crude oil is just as important as it represents whether or not the costs of the oil can meet the environmental standards in the consuming countries. Crude oil with low sulphur content is sweet crude and crude oil with high sulphur content is sour crude. Nevertheless, sweet crude is popularly sought after because it commands a higher price. The lower refining costs are what give sweet crude a higher price command.