What does an oil trading company do?
What is oil trading? Oil trading is the buying and selling of different types of oil and oil-linked assets with the aim of making a profit. As oil is a finite resource, its price can see massive fluctuations due to supply and demand changes. This volatility makes it extremely popular among traders.
What is flat price in oil trading?
1 The “flat price” is the absolute price level of the commodity. For instance, when oil is selling for $100/barrel, $100 is the flat price.
What is EFS in oil and gas?
Exchange of futures for physical is also referred to as exchange of futures for product and exchange of futures for cash (as in cash commodity). Exchange of futures for swap (EFS) can be used if the futures position is being traded for a swap contract.
How do oil trading companies make money?
Oil speculators usually make their money by betting on crude oil futures. For example, someone bearish on oil could sell short a futures contract, and if oil did indeed fall, the trader could buy back the contract at the now-lower rate and pocket the difference.
What are oil derivatives?
Oil derivatives are financial instruments using oil, usually crude, as an underlying asset. The derivative has no inherent value and is only a contract for an oil-related activity, but people can trade, sell, and buy derivatives to access the value of the oil used as the basis of the contract.
How do you trade oil stocks?
Investors can speculate on the price of oil directly by trading in oil derivatives or the USO exchange traded product, which tracks the price of WTI crude. Investors can also play the oil markets in a more indirect manner by investing in oil drillers and oil services companies, or ETFs that specialize in these sectors.
What is physical oil trading?
On the physical market, oil trading involves exploration for hydrocarbon deposits, which are drilled, pumped out and refined. Unlike with many other commodities, it is not necessarily supply and demand but instead the oil futures market which dictates the price of oil.
What is an Efrp trade?
An EFRP is a transaction that involves a privately negotiated, off-exchange execution of an exchange futures or options contract and, on the opposite side of the market, the simultaneous execution of an equivalent quantity of the cash product, by-product, related product or OTC derivative instrument corresponding to …
How can I invest in rising oil prices?