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What Drives the WTI Oil Price?

What is USOIL (WTI)

USOIL, also known as West Texas Intermediate (WTI) crude oil, is a type of crude oil that is produced in the United States. It is one of the most heavily traded commodities in the world and is used as a benchmark for oil prices globally.

What's good about it?

USOIL is an attractive asset for traders because of its high liquidity, volatility, and its ability to be traded 24 hours a day. Its prices are influenced by a range of factors, including global demand and supply, geopolitical tensions, and economic indicators.

How does it compare to Brent (UKOil)

When compared to Brent crude oil, which is produced in the North Sea, USOIL typically trades at a slight discount due to differences in the quality and location of the two commodities. Brent crude is generally considered to be of a higher quality and is used as a benchmark for oil prices in Europe and Asia.

Who are the main parties involved?

The parties involved in USOIL include oil producers, refineries, speculators, hedgers, and traders. Oil producers are responsible for extracting the crude oil from the ground, while refineries process the crude oil into various types of petroleum products. Speculators and traders can buy and sell USOIL futures contracts or CFDs on the commodity, while hedgers use these financial instruments to manage their exposure to price volatility.

What affects the prices of USOIL?

The price of USOIL is affected by a wide range of factors, including global supply and demand, geopolitical tensions, and economic indicators. For example, when the demand for oil is high, such as during periods of economic growth, the price of USOIL tends to increase. Conversely, when the supply of oil is high, such as during periods of oversupply, the price tends to decrease.

Key highlights of USOIL prices

In recent years include significant fluctuations, with prices reaching an all-time high of over $140 per barrel in 2008 before plummeting to below $30 per barrel in 2016. In recent years, prices have been impacted by the COVID-19 pandemic, with a significant drop in demand leading to a sharp decline in prices, even going as low as -$37.63 per barrel in April 2020. However, prices have since rebounded, and the commodity remains an attractive asset for traders seeking exposure to the global oil market.

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Commodities FAQ

To trade commodities like Brent oil, WTI oil with CFDs, below are the recommended steps.
1. Choose a trusted broker. There are plenty of brokers on the market, like MiTrade, IG, Capital. Among them, we would recommend MiTrade for its 0 commissions, low spread and flexible leverage. MiTrade is also licensed by ASIC, a world-renowned licensure used by many legitimate exchanges.
2. Enter a contract for difference: this means you will exchange the difference in price between when the trade was opened and closed.
3. Choose your leverage amount (fixed or variable) based on your goals.
4. Withdraw your winnings!

Diversification: Don’t put all your eggs in one basket! Use this to reduce your risk, but limits short-term returns.
Inflation Hedging: Use your oil investments to hedge against inflation in the future.
Speculation on commodities prices: Feeling confident? Invest in future speculation to get big winnings today.

If you are someone who can skillfully track and manage world events, while understanding the ins and outs of popular commodities like gold, silver, oil and their derivatives, then you may be able to make an attractive profit from investing in commodities. Learn what moves the commodity and you can minimize your risk.

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