Premium Essay

Crudeoil

In: Computers and Technology

Submitted By priya21
Words 1844
Pages 8
reportR.LAKSHMI ANVITHA
(1226213102)
OIL TRADING -
SUPPLY AND DEMAND ANALYSIS
SUMMARY:
Oil, also known as petroleum, is the most actively traded commodity in the world. The price is usually quoted per barrel. Oil trading is transacted on changes in the price of crude oil and does not involve a physical purchase of the commodity. The direction of the price movement determines whether a trader will profit or not. The two kinds of contracts that are traded are oil futures and options. The price of oil can be significantly affected by political factors, as well as environmental factors such as natural disasters. Other influencing factors include demand such as that driven by modernizing populations in India and China, as well as supply - that is, production rates in oil producing countries. In addition, technological advances in alternative energies may also affect the price of oil. In short, oil trading can involve significant price fluctuations making it an exciting and potentially profitable market. Oil prices also affect currency trading. Sometimes, a weakened US dollar may cause a rise in the price of oil. Other currencies that rely on commodity prices, such as CAD can also be affected by changes in oil prices. In this report we are analyzing the demand and supply , price factors of crude oil.
INTRODUCTION:
Until as recently as the early 1970s, the main channel for oil supply was the integrated system of the major oil companies. Each company had its own source of crude oil supply as well as the capacity to refine it. Petroleum products outside this closed system, either released from it due to imbalances between refinery output and market demand, or refined independently of it, constituted the basis for spot trading.
The volume of spot trading was limited to around5 % of the total oil trade, while the remaining 95% was based on contracts specifying prices

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