Traders on global Oil markets pushed black gold’s price down on Thursday morning. Continuing peace talks as well as a lockdown in Shanghai and a potential release of U.S. strategic reserves could have contributed to this downtrend.
Crude oil, also known as North American crude oil, is the underlying instrument for trading oil extracted from US land and coastal waters. Its biggest counterpart is Brent Oil – a benchmark for North Sea crude oil.
Oil CFD is a financial derivative which follows price changes in Crude oil futures, the world’s largest and most traded commodity. Oil futures CFDs are traded on Plus500’s trading app 23 hours a day, 5 days a week, based on price quotes provided by the New York Mercantile Exchange – a leading commodity futures market which is part of the Chicago Mercantile Exchange (CME).
The factors affecting crude oil prices are generally divided into three groups:
Supply: includes raw oil resources that can be physically extracted from land or sea, and oil reserves which consist of a daily, weekly or monthly amount of oil barrels that can be produced at a price that is financially beneficial.
Demand: reliance on oil supplies and by-products for maintaining growth in global economy, and the adoption of alternative energy sources such as wind, hydro-electric and solar energy.
Relations between major players in oil markets
Production agreements between leading producers of petroleum concerning how much oil to produce.
Political or economic sanctions imposed on (or lifted from) oil-exporting countries such as Iran, Venezuela, Qatar or Russia can result in fluctuations in global oil prices, along with the prices of other commodities.
Speculations and trading sentiment
Trading oil through futures contracts is considered a common form of trading. Due to the large number of market speculators – central banks, investment banks, financial institutions, brokerage firms, individual investors, day traders, etc. – this activity has the ability to strengthen or reverse the momentum in oil prices.
There are a number of different types of crude oil, with different pricing characteristics. The two leading international crude oil prices are:
NYMEX WTI Crude Oil – determined according to a benchmark in oil futures contracts as traded on CME’s New York Mercantile Exchange.
Brent Oil – determined according to an international benchmark used primarily in Europe, and traded on the Intercontinental Exchange (ICE).
Another important oil pricing benchmark is the OPEC Basket which includes an aggregate for oil produced and exported by the countries of the Organization of Petroleum Exporting Countries, with Saudi Arabia being its chief member.