What are oil deals?

In recent years, the oil market has become one of the topics of interest for many investors. With the extreme volatility of this commodity and its long-term trends, investing in this commodity, either as part of a long-term or short-term strategy, is becoming more and more common. Oil business includes buying oil, buying kerosene, buying oil products, selling oil, selling oil products and oil-related assets with the aim of making a profit. Since oil is a finite resource, its price can fluctuate greatly due to changes in supply and demand. This volatility makes it extremely popular among traders. In the rest of this article, we will discuss why stock market investors are interested in this asset and how they can buy or sell oil and oil derivatives.

There are different ways to invest in oil by buying oil or selling this raw material.

Different methods of buying and selling oil:

For example, future or forward contracts can be used for this purpose. This is one of the preferred methods of investing in oil prices for the long term. However, investing in black gold futures requires a certain knowledge of the market and the ability to effectively predict future trends.
Another method that is currently experiencing great growth and allows for speculation about oil price fluctuations is related to the purchase of petroleum products. This type of trading instrument is offered by brokers or online brokers and is in the form of a guarantee.
Therefore, these two methods allow stock market investors to buy and sell barrels of oil in the market. Of course, this is not a matter of physical buying and selling of these barrels, as this requires storing and moving them, but simply taking a position on the price of these barrels.

Factors affecting the purchase price of oil

What is the cash price of oil? Spot oil prices represent the cost of buying oil or selling oil immediately or “on the spot” rather than at some future date. While futures prices reflect what the markets believe oil will be worth at future expiration, spot prices reflect what it is worth now.
Before investing in oil, an investor should know how to study the oil market and its environment in order to be able to recognize in advance the future trends that this asset will follow. In any type of investment, it is necessary to be able to recognize the upward or downward movements in order to buy or sell its assets at the right time. In fact, several external factors can have a direct impact on OPEC, West Texas Intermediate or WTI or Brent oil prices. It is necessary to analyze them systematically before buying or selling barrels.

• One of the factors influencing the price of oil is related to the relationship between oil and the US dollar. In fact, we know that the price of oil and oil products, like other raw materials such as gold or natural gas, is quoted in US dollars. Therefore, there is an inverse correlation between the value of the dollar and oil. This means that a strong dollar makes it less attractive for foreign investors to buy oil due to an unfavorable exchange rate. Therefore, it often leads to a decrease in demand and thus a decrease in the price of oil. The reverse is also true, as a weak dollar makes oil more attractive, increasing demand and thus increasing prices.
• Another very influential element regarding the evolution of crude oil is related to the release of American stocks. In fact, the United States is currently the world’s largest oil consumer. Therefore, the stock status of this country, which is published weekly, is an important indicator for determining the level of demand. Here, it is important to compare these stocks with analysts’ forecasts. When these stocks are larger than expected, it means that demand is weak and generally lowers prices. When inventories are lower than expected, this indicates increased demand and may cause prices to rise.
• Finally, it is important to study how oil is supplied before buying or selling this raw material. In fact, the purchase price of oil, like any asset listed on the stock exchange, is determined by the power of supply and demand, specifically, the quotas set by OPEC and OPEC+, which generally increase or decrease to influence prices. will be monitored. Current events and conflicts related to these producing countries can also have a great impact on the price of this commodity. In times of geopolitical conflicts with one or more producing countries, it is common to see a significant increase in the price of crude oil due to investors’ fear of reduced supply to importing countries.