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Fundamentals of Futures Crude Oil Prices
May 6, 2011

Fundamentals of Futures Crude Oil Prices

To talk about oil trading, I bet that this topic will get much concern from you guys since crude oil futures are among the most popular and widely watched futures markets. You know, there isn’t a day without the mention of crude oil prices on the television, in newspapers or magazines. This shows the importance of this market to everyone. How about you? If you have decided that speculating in crude oil is something suitable for your risk capital. You will want to learn as much as possible about crude oil futures. There are more than a few things that can affect crude oil prices. Now, we will together check out some fundamentals worth noting if you are trading futures crude oil.

Supply and Demand

Domestic demand and global demand both affect on crude oil price. Over the last decade, emerging markets like China and India have increased demand for crude oil and so this led many speculators to suggest that demand would outpace supply. On the domestic side, the regular reports from the EIA on refining activity and crude oil supply have direct impact on crude oil price and also crude oil futures price volatility. Released weekly, EIA reports and API reports are often key fundamental influences on crude oil futures markets.

OPEC Output

OPEC as all of us know that is The Organization of the Petroleum Exporting Countries. From its name, we all can be sure that its activities wil have strong effect on oil market. Opec production levels and promises for production can also add volatility to crude oil prices. Even a scheduled OPEC meeting and speculation about increases or cuts to oil production can impact crude oil futures markets.

Weather

That sounds strange that weather can affect oil price, but it will. Storms in the Gulf region of the United States as well as the North Sea can halt production of crude oil both on drilling platforms as well as refineries which may be shut down anticipating the arrival of a bad storm. Events like Hurricane Katrina stand as strong examples of how weather may have a direct impact on crude oil price.

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