Crude, petroleum, Texas tea, black gold. Oil to you and I. That precious gooey black stuff has been at the top of many trader’s watchlists for a long time. For good reason, too. Today, we’ll explain what the oil landscape looks like in 2021. After that, we’ll give you all the details of what looks like a busy week ahead in the tradesphere.
Trading oil in 2021
If you’re looking into the black stuff as a potential way to pump your fortune, you should probably know a thing or two about it. That’s where the next 5 minutes of reading may help
#1 It’s a super popular commodity
This stuff is hot property (quite literally when it comes out of the ground). Crude oil is one of the most important energy sources on the planet, largely due to its extensive use in our everyday lives.
It’s not only a basis for fuel and heating, it’s also used in waxes, lubricants, tarmacs, and other petrochemicals. These by-products are then refined and turned into more familiar products such as plastics, clothes, etc.
Many of the products we use on a daily basis contain these materials, and if not, they’re transported to their end-users via plane, boat, train, truck or car all of which likely require oil to run.
It’s a commodity that’s constantly in demand, and it’s slowly but surely running out. A scenario that excites many a trader!
#2 It’s a volatile landscape with lots of players
The phased end of lockdowns has resulted in massive price hikes due to the increased demand for fuels in the industrial and transportation sectors. Over the summer months, the relaxed rules on movement have also pushed up demand.
Earlier this month, a Reuters survey found that in July, OPEC oil output rose to its highest level since April 2020. The group agreed to remove production curbs and top exporter Saudi Arabia has phased out its voluntary supply cut. This has had some effect on price over the last 2 weeks.
We can see that the extra supply has led to a price drop of ca. $5 USD, coinciding with increased trading volumes. Oil prices fell last week after the International Energy Agency (IEA) said the spread of the Delta variant would slow the recovery of global oil demand.
This is a good example of the volatile nature of the market.
It’s also worth noting that these changes are often manmade (as above). That’s because there are some very important players in this industry, both public and private. The most notable of which are household names.
The individual or collective actions of the following groups of organisations and companies can have a dramatic effect on the market:
● The Organisation of Petroleum Exporting Countries (OPEC)
● The International Energy Agency (IEA)
● The US Energy Information Administration (EIA)
● ExxonMobil Corporation
● China National Petroleum Corporation (Sinopec)
● US Department of Energy
● Abu Dhabi National Oil Company
● Royal Dutch Shell
● BP plc
If you’re trading oil, you’re going to want to keep an eye on what these guys say and do.
#3 The near future could be “interesting”
The 2020s are shaping up to be the decade of the electric car. Plug-in cars make up just one-tenth of 1 percent of the global car market today. But things are changing.
Battery prices fell 35% in 2020 and, because of that continued drop, it’s expected that a plug-in EV will cost the same as an ICE car in just a few years.
However, in order for real penetration to occur, there’s a reliance on tech companies like Tesla to produce cars that are capable of travelling long-distances. Right now that’s just not possible.
Such is the importance of the automotive industry, if battery prices continue to drop, tech companies continue to invest in better technology, and governments offer more incentives for people to buy electric — we could very well see the oil market collapse as soon as 2023, according to Bloomberg.
There’s food for thought right there! But, if the last 18 months have taught us anything it’s that almost anything can happen, especially when you least expect it.
What’s on the trading agenda this week?
Here’s everything you need to keep track of this week.
● JPY — GDP Growth Annualized Prel (Q2)
● GBP — Employment Change (MAY)
● EUR — GDP Growth Rate QoQ 2nd Est (Q2); GDP Growth Rate YoY 2nd Est (Q2)
● USD — Retail Sales MoM (JUL)
● NZD — Interest Rate Decision; RBNZ Press Conference
● GBP — Core Inflation Rate YoY (JUL); Inflation Rate YoY (JUL)
● EUR — Core Inflation Rate YoY Final (JUL)
● CAD — Core Inflation Rate YoY (JUL); Inflation Rate YoY (JUL)
● USD — FOMC Minutes
● AUD — Employment Change (JUL); Unemployment Rate (JUL)
● JPY — Inflation Rate YoY (JUL)
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
The Contentworks team