If you really crave an exhilarating, easy and money-making market to trade, then future oil trading is your solution. The interim report by the Interagency Task Force, released in July, found that speculation had not caused significant changes in oil prices and that fundamental supply and demand factors provide the best explanation for the crude oil price increases The report found that the primary reason for the price increases was that the world economy had expanded at its fastest pace in decades, resulting in substantial increases in the demand for oil, while the oil production grew sluggishly, compounded by production shortfalls in oil-exporting countries.
President Trump held a meeting with American oil executives Friday, promising to support the industry amid a collapse in oil prices partly due to a drop off in demand related to the coronavirus and also due to a price war between Russia and Saudi Arabia.
For example, if traders acquire large quantities of futures at prices that are higher than the current market price, this will cause for oil producers to hoard their supply currently at hand so that they can then dump it on the market in the future at the at the new higher price-this promptly cuts of the current supply of oil to the marketplace and simultaneously drives up both the future and present price of the commodity.
A deviation from the reference price shall be deemed significant if the price of the mistrade transaction deviates from the reference price by more than the higher value between the mistrade range floor or 20 percent of the PCP for the corresponding futures contract, unless another regulation has been made for an individual product.
Because the crude oil industry has developed hardly at all in recent years due to a lack of investment capital for discovery, extraction and further processing, global production can barely meet the high demand for crude oil from countries such as the USA, China or India.
So if you believe the price is going to increase you would purchase a call option and if the futures price increased so would the oil futures chart intrinsic value of the option, meaning the option is now worth more and can be sold back to the market to realize the profit.
NEW YORK (Reuters) – Crude futures surged for a second day on Friday, with both U.S. and Brent contracts posting their largest weekly percentage gains on record due to hopes that a global deal to cut crude supply worldwide will emerge early next week.
OPEC and its allies are working on a global agreement for an unprecedented oil production cut equivalent to around 10% of worldwide supply in what they expect to be a global effort including countries that do not exert state control over output, such as the United States.
The purchase of a future is a contract that locks in the price today so that the purchaser can acquire the underlying commodity in the future at today’s agreed upon price regardless of any possible market conditions in the future (the agreed upon date).
In fact, oil prices are quite volatile. The price decline may be muted because Saudi Arabia sent a signal that a production cut deal may be ahead, and the United States has said it will put pressure on Saudi Arabia and its allies for such a deal. Brent has become a better indicator of worldwide pricing in recent years, although WTI in 2017 was more heavily traded in the world futures markets (after two years of Brent volume leadership).
If you want to get into the oil futures market but can’t find an affordable broker, you might consider widening your search to include firms like Discount Trading. For example, if one was to go long at $1.5500 and the markets moved to $1.5535, one would have a profit of $147 ($1.5535 – $1.5500 = $0.0035, $0.0035 x 42,0000 = $147).