Oil: An asset with a future
The first thing we should confirm regarding oil is that this asset will always be popular for trading and always in demand. In fact, oil is still the most used fossil fuel throughout the world and plays a primary role as a commodity in the fabrication of numerous industrial products. Due to the development of numerous countries that have consumed little oil up to now, the demand has therefore risen enormously, but also because of the exhaustible nature of this energy, it seems logical that the supply will lessen in the future whereas the demand will continue to grow. Although this statement is slightly mitigated due to the development of renewable forms of energy, the latter are still far from being able to take the stage alongside oil as a major energy source and therefore oil still looks to have many good years ahead as an investment. Investing in oil over the long term is therefore considered as a secure placement.
Profit from the fall in the price to invest in oil over the long term:
You have no doubt noticed that, since 2014, the oil prices have fallen greatly. After approaching $100 per barrel they finally lost nearly 50% of their value. But, as with all financial markets, the oil market is governed by cycles alternating between rising and falling trends. Therefore, the analysts predict a new rising trend shortly that may enable investors to achieve substantial profits. It is therefore judicious to closely monitor the emergence of this new trend to take position over the long term, or take position now using a short term cover.
How to cover a long term investment in oil?
As we have just seen, the oil sector analysts expect a new rise in the price per barrel of oil in the coming months or years. It may therefore be beneficial to invest in oil over the long term. But, while waiting for this trend to begin, the price per barrel may still experience a further fall. To cover any eventual losses during this period, you may opt for a strategy that aims to take short parallel positions to sell with a strong leverage effect of which the profits enable you to keep your long position open until the rising objective is reached.
The indicators to take into account for oil trading:
To trade in oil online using Optimum Capital Trade Company's it is strongly recommended to use data from both technical and fundamental analysis. Your technical analysis can be completed using comprehensive customised charts that are available through your broker on the trading platform upon which you can display different indicators. Concerning fundamental analysis, this consists of monitoring and analysing the factors and exterior events that may influence the oil price. These of course include data on the supply and demand of oil throughout the world as well as other indicators. For example, the American oil stocks are carefully monitored by traders. You will find them each week in the economic calendar as they are published every Wednesday. These stocks give you concrete information on the demand and consumer levels of oil. Large stocks have a tendency to lower the price of oil and vice versa. Finally, the U.S. Dollar rate can also influence the oil price as an advantageous exchange rate can encourage buyers to invest in the commodity which is quoted in this currency.
