Oil futures trading is an attractive proposition for many traders. Its volatility gives investors the potential to realize significant profits if they get their timing right. However, the risk of losses also looms large. It’s not something to do with your retirement savings or that down payment on a home, but for those who have the patience and boldness to trade in this volatile market, it can be an interesting way to diversify a portfolio.Find out :theinvestorscentre.co.uk

When you buy or sell oil futures, you are essentially agreeing to buy or sell a specific number of barrels of crude oil at a specified price on a certain date in the future. This is done through an exchange, which standardizes the contract’s terms. Depending on the type of contract you trade, these can either be settled physically or via cash payments.

Oil Futures Trading: Common Mistakes to Avoid

Crude oil is the raw material used to produce gasoline, heating oil, diesel fuel and other petrochemicals. It’s also used to power vehicles and generate electricity. It comes in various grades, with light sweet crude (NYMEX symbol /CL) the most popular because it is easier to distill into other products. Other grades are traded, such as Brent Blend crude.

Fundamental factors that influence oil prices include global economic growth, geopolitical events and the view of OPEC on production. In addition, investors look at weekly inventory reports from the U.S. Energy Information Administration and from countries such as China for insight into domestic production and consumption. Finally, the transition to renewable energy sources poses a long-term threat to demand for fossil fuels.