Oil trading prospects

Oil trading prospects in 2012 – Thumbs up or thumbs down?

According to the recent reports, the Irish economic growth could be hampered by the increasing oil prices and this will be fueled by the US economic growth and the increasing tensions in the Middle East. The future of oil trading may even become worse with the weakening of the Euro but what are the prospects of this trade in 2012? A latest report shows that while a decrease in electricity and gas prices caused the oil index to fall 2% for the month of December, 2011 but the same index now stands at 143, which is 5% more than what was seen in December, 2010. Oil is sold in US dollars and when the Euro falls, this pushes up the energy costs. Though the oil prices hit a 150-year high in 2011, the investors are worried about the prospects in 2012.

Crude oil futures trading – What they are and why you should invest

As the oil prices spiraled out of control and increased by almost 15% in a week, you might be speculating whether or not this is the perfect time to invest your dollars in oil. You can resort to a number of ways to enter the oil industry and also make money to build your financial fortress. With the increase in the debt level in the US, most people are looking at ways in which they can boost their income and assemble money to repay their debt obligations. You can purchase the stocks of the oil companies but this is one of the most lucrative and risky investments that you can make. If you don’t know what is oil futures, read on to know about it.

What are oil futures and how do they work?

Oil futures are nothing but derivative securities that give the opportunity to the holder to purchase oil at a particular price and this process is similar to the stock market. If you can work out your future by the next settlement date, you can easily purchase oil at the mentioned price in the futures contract. When you can sense that the oil price may increase in the near future, you may hold on to the future contract and sell it off at a later date in order to make better returns.

What are the advantages that you may reap when you invest in oil futures?

If you’re looking forward to make money through investment, you can certainly choose the oil futures as this is the most actively traded derivatives in the global market. Have a look at some benefits.

• Liquidity: Since the oil futures are traded in high volumes in a particular day, these investments are highly liquid. Being the most aggressively traded financial asset, they also carry enough liquidity and an investor can easily turn this into cash.

 

• Leverage:You can easily purchase the oil futures on a close margin and the margin requirements are decided by the oil exchanges. When it comes to the margin of oil, they are often put at a low level of 5% of the investment value. This implies that the investor can buy $100,000 worth of oil future contracts for only $5,000.
• Outshines some other derivatives: There are some investors who have been able to thousands of dollars through a single trade while having to invest a less amount than what is needed in the stock market.
• The concept of trading oil futures is extremely easy and this makes it a convenient option for the investors and a broker who has your best interests in mind will make the entire process easier. Research and do your homework to make the most out of the trade and earn lots of money by efficient trading.Neil R. Williams is a financial consultant and a market analyst. He is also an active member of Debtcc and discusses all financial concerns in the forum. Please follow facebook.com/debtconsolidationcare for regular updates.