Crude oil trading offers excellent opportunities to profit in nearly all market conditions due to its unique standing within the world’s economic and political systems. Also, energy sector volatility has risen sharply in recent years, ensuring strong trends that can produce consistent returns for short-term swing trades and long-term timing strategies.
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When tracking price movement and making trades, remember that the price of unleaded gas and heating oil can influence the price of crude oil. Demand is generally highest during the summer and winter months, but for different reasons. During the summer, increased driving boosts the demand for crude oil and causes prices to rise. During the winter, a higher demand for heating oil causes prices to move higher. Watch the weather in the Northeast, since it’s the part of the country that uses heating oil more than any other, and watch for oil production cuts or increases from the Organization of Petroleum Exporting Countries (OPEC), which determines global supply and demand for crude.
Major news events can happen overnight, causing oil prices to swing unpredictably and widely. The same thing can happen throughout the day since crude futures trade around the clock. Whether it’s an economic report or tensions in the Middle East, a tight supply situation can exacerbate price movement. Supply and demand dictate how prices move, but the market moves on emotion as well, especially with retail investors who day trade. If tensions escalate in the Middle East, there’s no telling the extent of possible supply disruptions, and traders often react swiftly on the news, adjusting their strategy following price fluctuations