5 Steps to Making a Profit in Crude Oil Trading
Content
As such, removing subsidies can allow a country to increase oil production, thus increasing supply and lowering prices. In addition, cutting subsidies can decrease any shortage of refined products, since higher oil prices give refineries an incentive to produce products such as https://doceree.com/provider/uncategorized/oil-profit-review-turn-market-volatility-into-trading-success/ diesel and gasoline. While the oil and gas industry isn’t new to supply disruptions and price volatility, the situation today is unique. A confluence of economic, geopolitical, trade, policy, and financial factors have exacerbated the issue of underinvestment and triggered a readjustment in the broader energy market.
Global Oil & Gas Exploration & Production
With arduous trade negotiations expected to take place during the coming 90-day reprieve on tariffs and possibly beyond, oil markets are in for a bumpy ride and considerable uncertainties hang over our forecasts for this year and next. All OPEC members benefit from higher prices as a result of the supply quotas adopted by the organization, but each member also has an incentive to supply crude above its quota to maximize oil revenue. The scale of Saudi Arabia’s production relative to that of other OPEC members gives those countries an additional incentive to supply as much crude as OPEC’s dominant producer will tolerate. As a result, accusations of cheating on quotas have surfaced throughout the organization’s history, challenging critics’ claims it is an effective cartel. Reports say we’ll use more renewable energy, but oil will still be important for a long time. Experts think that in some places, oil demand might not grow or might even go down.
Oil up on US-UK trade deal, hopes for US-China talks
It projects global GDP growth of 3.3% in 2025, up from 3.2% in 2024 and 2023, and 3.3% again in 2026. U.S. dollar crosses with Colombian and Mexican pesos, under tickers USD/COP and USD/MXN, have been tracking crude oil for years, offering speculators highly liquid and easily scaled access to uptrends and downtrends. Bearish crude oil positions require buying these crosses while bullish positions require selling them short.
But global refined product stocks have swelled to three-year highs, pressuring margins across key refining hubs. According to conservative forecasts of OPEC’s crude oil production, along with the IEA’s predictions for demand and non-OPEC supply, global oil inventories are projected to rise by around 900,000 b/d this year. An escalation in the Middle East regional conflict has potential to reduce oil supplies, and regional political uncertainty can increase the risk premium. Meantime, although OPEC+ producers will likely continue to limit production in 2025, the potential for weakening commitment among OPEC+ producers to continue cutting production adds downside risk to oil prices. Because of this lack of refining capability, Middle East crude oil was in high demand, a grade that the US and many terminals are capable of refining.
US petroleum product imports were 1.9 million b/d in the first three quarters of 2024, down from 2.1 million b/d in the same period of 2023. US petroleum product imports decreased from most countries, while imports increased from China and South Korea. During this year’s first three quarters, the US imported 6.62 million b/d of crude oil, compared with 6.5 million b/d for the same period a year ago. Crude oil imports from OPEC members averaged 1.01 million b/d, compared with 1.08 million b/d in the first three quarters of 2023. The US’s crude imports from Saudi Arabia for 2024’s first three quarters dropped to 298,000 b/d from 384,000 b/d for the prior year’s first three quarters. The leading source of US crude imports was Canada, which supplied 4.07 million b/d during the period.
Lower oil prices hurt the unconventional oil activity, but benefits manufacturing and other sectors where fuel costs are a primary concern. The U.S. Energy Information Administration (EIA) defines spare capacity as the volume of oil production that can be brought online within 30 days and sustained for at least 90 days. Essentially, spare capacity is the difference between a country’s current oil production and its maximum oil production capacity. If a supply disruption occurs, oil producers can use spare capacity to moderate increases in world oil prices by boosting production to offset reduced oil supplies. The report also highlighted that historically, a net supply surplus has a negative impact on oil prices.