Friday 2 December 2011

Oil Prices for Traders

Oil Prices along with currency and gold are one of the main indicators of almost all processes occurring in the world economic system. Political and economic events always stand behind the volatility of oil quotations.

Trading Oil Prices is a lucrative way for anyone to make a living - working just a few hours a week instead of slaving away working for the man. Due to the high demand Oil Prices futures give an investor plenty of opportunities to make money. Daily average movement of Oil Prices is around 1%.




With leverage of 100:1 provided by brokers you can turn the 1% into 100%. You may have unlimited profits and by using the 'Amount to risk' function, you can control the risk on each trade.

Beginning in the year 2000, the oil prices futures market detached itself almost completely from the crude market, leading to the assetization of oil prices, and the crippling impact reckless speculation in oil futures has had on the global economy. The futures market magnifies every change in oil prices through the enormous leverage that even the smallest of traders can exercise.

(If you are considering trading oil prices futures it is easy to get a complete understanding of oil prices and how they are determined in today's markets from the book encapsulating everything about Oil Prices by Industry Expert Salvatore Carollo.) Once you have a general understanding of oil prices then progress your education by learning how to trade oil prices via futures so you can made a good living. Open a demo practice account with any broker and practice first. Make sure also to develop your trading skills and acquire state of the art software such as TradeMiner - the best there is for trading oil.

A related area of trading which you also should examine is learning forex trading - where there are excellent opportunities to make money daily. You will find the TradeMiner software perfect for forex, oil and all commodities plus stocks. Online Trading is How to Make REAL Money - but only for those interested in BIG $s!

Oil Prices Trading

Oil Prices were news-makers last year along with the topics of the global financial crisis and Forex markets. Having reached the maximum of 147.26 USD per barrel on June 11, 2008, it lost 70 % of its price in half of a year. Analytics assumed that the main reason for oil prices collapsing was overheating of the market caused by speculative capital. From the fundamental point of view, 100 USD per barrel was acceptable, but oil just could not cost 140 USD per barrel.
Late 2008 oil prices stabilized within the range of 40-50 USD per barrel, and until spring it fell down to 38-42 USD per barrel. It was significant in the first half of the year that it was not bound to the dynamics of the American currency. For half the year it was outbidding, then oversold. At the time the fair price was 101 US dollars and until recently it's fair price was 70-90 US dollars per barrel. (Now with the global problems exacerbated by Iran Oil Prices have risen once again to $100 a barrel.)

In the summer, the largest world agencies and investment companies forecast that oil prices would not fall below 100 US dollars per barrel. And, there was a forecast that Oil Prices would go to 150-200 US dollars per barrel. Such forecasts are not uncommon as the biggest investment companies have their own positions on the oil market and recommendations of a rise are in their favor.
Participation by major funds and investment companies in rallies in oil prices is one reason for the extreme volatility of oil prices. At the time in 2008 as financial crisis overwhelmed the world nobody cared there was fraud in the primary market. The liquidity crisis forced a sell-off of all assets including primary contracts. Weak macroeconomic data and expectations of the demand for fuel reduction aggravated the situation globally. Today's situation is not far different from what was experienced with Oil Prices only a few years back.

Crude Oil Trade:
The oil produced across the world is not of the same quality and, consequently, differs in price. The prices depend on the density and the various paraffin admixtures that are added to the oil blends. The standard for the prices is the “Brent” oil grade, which is similar in composition to the one extracted in the North Sea, and the delivery contracts are settled at London raw exchange market. The price for this grade is often set up by Mass Media.
Mostly this price is a contract value for "Brent" oil in next month. When signing such contract called the futures the buyer is obliged to pay and accept the delivered product. The seller has to deliver it to the place indicated.
Futures contracts are being concluded at appropriate bourses and paid away daily at the current market price. The minimal contract volume is 1000 barrels. The main trading floors for the oil deals are the leading stock exchanges, such as NYMEX, CME, РТС and LOE.

Thursday 1 December 2011

Oil Prices

Oil Prices whether they be rising or falling always offer an opportunity to make money. Oil prices can alter the economic climate of nations overnight and create fortunes for traders no matter which way oil prices go. A few days ago oil prices had risen significantly and made oil the best performing asset class for the past month. Today oil prices have retreated slightly and changed the balance sheet valuations of oil companies almost at a blink.


The truth behind today’s increasingly volatile oil market is that over the past two decades oil prices have come untethered from all classical notions of supply and demand and have transcended any country’s, consortium’s, cartel’s, or corporate entity’s powers to control them. At play is a subtler, more complex game than most analysts realise involving runaway financial speculation, self-defeating government policy making and a concerted disinvestment in refinery capacity among the oil majors. The demand for oil is pervasive in all economies - developed, industrialised and less developed ones. Oil is the most traded commoditiy in the world. Not only does oil provide fuel for industry, households and transport it is often an ingredient in food, plastics and other materials. To make money trading oil it is not a matter of buying barrels of oil, transporting and storing them. A far easier way is to make money betting on oil prices in the futures market.

Oil had risen in earlier Asian deals when central banks on Wednesday in the euro zone, Canada, Britain, Japan, the US and Switzerland cut the cost of providing US dollars to prop up the global financial system. The dramatic move rallied global equities as traders welcomed these efforts to reign in the runaway euro zone crisis. Today Oil prices slid on rising weekly US jobless claims and downbeat Chinese manufacturing data. Oil prices for New York's main contract, light sweet crude for delivery in January, dropped $US1.19 to $US99.17 a barrel on Thursday. While oil prices for Brent North Sea crude for January sank $US2.16 to $US108.36 in late London trade.

For traders who were long oil since last month they were surprised when crude oil futures were pulled lower by official data for November which showed for the first time in 33 months Chinese manufacturing activity contracted. China's purchasing managers index (PMI) fell to 49 last month. This was down 1.4 points from October, marking the first contraction since February 2009 and likely to have a negative impact on Oil prices in the futures market.

Traders holding long positions in the oil futures market were in a quandry considering the impact of central banks' action to boost liquidity. However if you had a modest training in the basics of how to trade Oil Prices you could be making money in Futures!

Intertwined with Oil Prices are currencies. For example a spike in Oil Prices s usually matched by a decline in the US dollar. Therefore every oil prices trader should also learn Forex.