Crude oil is a fossil fuel found in the earth and formed by fossilized plants and animals over millions of years. Crude oil is refined into a variety of petroleum products, the most common of which is petrol, or gasoline. Crude oil is categorizes as light or heavy, and sweet and sour. Light, sweet crude is preferred because it requires less refinement before it can be sold on the market.
Factors that Can Influence Oil Prices
- OPEC: The Organization of Oil Producing Countries can affect the price of oil by increasing or reducing production among its member countries.
- Since oil is priced in US dollars, when the dollar depreciates, generally the price of oil rises, and vice versa.
- Seasonal considerations, including unseasonable weather, affect the price of oil as well.
Technology advances have made alternative technologies of crude oil development, such as tar sands and oil shale, more accessible. These alternatives have the potential to provide fuel for decades to come. Any developments in this field have the potential to influence prices.
- Global climate change is becoming more apparent, most will say due to carbon emissions from our reliance on fossil fuels. In recent years, much emphasis has been placed on developing sustainable energy sources such as fuel cells, ethanol fuel, liquid natural gas, solar, and more, with the hope that they can reduce global dependence on oil.
Oil is one of the most widely traded, in-demand commodities. The fluctuation of oil prices across the globe can have a major impact on the economic health of countries, whether they are oil producers or oil consumers.
Any rise or fall in oil prices can have an effect on oil-producing economies. However, the countries that import oil are more vulnerable to changes in the oil prices because oil is priced and sold in dollars. While attempts are being made to transition to more sustainable fuel sources, the fact remains that crude oil is still in high demand and the reserves are limited.
Anyone who wants to trade crude oil should be aware of the many factors that may influence prices and watch developments carefully before trading. UFX is committed to the success of its traders and provides all the tools to help you make an informed decision about crude oil trading.Trade Oil