Crude oil is considered a highly valuable commodity because the demand for it is consistently at high levels. Except for being the main global energy source in a modern world with constantly increasing energy and consumption needs, it is also refined into high demand everyday products such as gasoline, diesel and more petrochemicals. Therefore, supply and demand are often under pressure.
What is Crude Oil?
Crude oil is a liquid fuel source drilled from the ground. It is used for transportation, heating and electricity generation and for the production of different petroleum products and plastics.
Major Crude Oil Types
Among the hundreds of types of crude oil traded on global markets, Brent and West Texas Intermediate (WTI) are the two primary types used as global benchmarks for oil prices.
Brent Crude Oil (UK Oil): Brent oil is drilled from oil fields in the North Sea. Brent is the benchmark for African, European and Middle Eastern crude oil.
WTI Crude Oil (US Oil): West Texas International crude oil is drilled in US oil fields mostly located in Texas, Louisiana and North Dakota. WTI is the benchmark for North American crude oil.
What Moves Oil Prices?
Oil prices are highly volatile and are mainly affected by supply, demand, and market sentiment. When the demand surpasses the supply, oil prices rise. When the demand for the commodity is lower than the supply levels, oil prices fall.
The most common factors affecting supply and demand are the following:
- Natural Disasters
- Geopolitical Situation (wars, social unrest)
- Global Economic Performance
- Seasonal Demand
- Population Increase
- Shipping Availability
- Freight Rates
- Global Oil Inventories
- Renewable Energy Advancements
- The Influence of OPEC
How to Trade Oil?
With Traders Trust you can trade CFDs on Brent Crude (UK Oil) and WTI (US Oil) crude oil. You can open long (buy) or short (sell) positions based on where you think the oil market is going to move.