How to make money on «black gold»

It is not for nothing that oil was called "black gold", because it is she who occupies the lion's share of the energy market in the world. It is vital to the economy. And so as not to talk about alternative energy, the state of affairs in the foreseeable future will not change much.


It is not surprising that oil trading is a good way to make money not only for states and large corporations, but also for private investors and traders.


Ways to make money on oil


There are several options for transactions that allow you to make a profit from "black gold":

  • futures
  • oil stocks
  • binary options
  • CFD
  • ETF


Futures are the most popular instrument where trades have a specific execution period. Settlement futures only exist within the exchange and have speculative purposes. They are available for traders who just need to choose the type of asset on the trading platform and decide whether to open a deal to increase or decrease the price. Deliverable futures differ in that oil is bought physically. For example, an oil refining company buys a tanker with this mineral from a supplier, which is to arrive at the customer in exactly one month. The largest oil exchanges are NYMEX and ICE.


Shares in oil production, oil refining and transportation companies are not purchases of oil, but investments in the industry associated with it. These companies are among the richest in the world. Any interested investor can become their co-owner.


Binary options open up an opportunity for perhaps the fastest earnings. Fixed profit trades can be completed in less than a minute. It is enough to predict the direction of movement of the price of raw materials in the selected time period. Either it becomes more expensive or cheaper. Thus, unlike operations with the same shares, you can earn money in any situation on the market.


CFD is a contract for the difference in the price of oil or shares of oil companies at the beginning and end of the transaction. The essence is close to settlement futures.


ETFs are exchange-traded funds that own the same type of assets, in this case, related to the oil sector. It turns out the investment industry portfolio collected for the trader. Working with ETFs helps to diversify investments.


What affects the price of oil and related commodities


Whatever trading option a trader or investor chooses, he needs to predict the development of the market situation. To do this, you need to be able to analyze several factors.


Political factors affect the economy, including the price of oil. Even the statements of the top officials of the largest countries and organizations of the world can force the prices of raw materials to change significantly.


Economic indicators of the largest oil importing countries. The more actively the economy grows, the more raw materials are purchased.


Statistics. For example, oil reserves in the United States - the world's leading economy. More inventory means less purchases and vice versa.


Environmental factors. In particular, natural disasters can disrupt the process of oil production and transportation in certain regions.


In any case, it is much easier to monitor the prices of “black gold” than most other assets. There are always a lot of statistics and analysts on the Internet on oil. It remains only to make your own forecast based on the available data.

10 September, 2020

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