Crude oil serves as a primary raw material for producing fuels like gasoline, diesel, and jet fuel, as well as various petrochemical products. Its prices are highly volatile, driven by supply-demand shifts, geopolitical tensions, and economic factors. For traders, crude oil presents both lucrative opportunities and heightened risks due to its unpredictable price movements.
Introduction
Crude oil is a highly valuable natural resource, often referred to as "black gold," due to its significance in the global economy. Composed of hydrocarbon deposits, crude oil is found in underground reservoirs and varies in viscosity and colour, ranging from shades of black to yellow. Once extracted, it is refined into essential products like gasoline, diesel, and petrochemicals that fuel industries worldwide.
Despite being produced by a few major companies, crude oil is traded globally, with nearly 80% transported via waterways and the rest through pipelines. The Middle East holds the largest oil reserves at 48%, followed by regions like North America and Africa. Organisation of the Petroleum Exporting Countries (OPEC), a key player in the industry, controls around 40% of the world's crude oil production and 75% of proven reserves.
Factors that Impact Crude Oil Price
- OPEC output or supply: OPEC, as a major oil-producing group, significantly impacts global oil prices. Changes in OPEC's production quotas directly affect the supply of crude oil, influencing price fluctuations. If OPEC reduces output, oil prices tend to rise, and if output increases, prices may drop.
- Changing scenarios in oil demand: Rising industrialisation and economic growth in emerging and developing countries lead to higher oil demand. As these nations expand, the demand for energy, particularly crude oil, increases, putting pressure on global supply and impacting prices.
- Refinery utilisation rate: Refinery utilisation measures the capacity at which refineries operate. Higher rates indicate strong demand for refined products, potentially raising crude oil prices. Conversely, lower utilisation rates may signal reduced demand, affecting prices.
- Global geopolitics: Price volatility might result from supply chain disruptions caused by political instability in oil-producing nations. Wars, sanctions, and diplomatic tensions can restrict oil flow, driving prices higher due to supply concerns.
- Weather Conditions: Adverse weather events like hurricanes and storms can disrupt oil production and transportation, particularly in key areas like the Gulf of Mexico. These disruptions can reduce supply, pushing prices higher. Heating demand in winter and transportation demand in summer can indirectly impact crude oil prices.
Things to Consider Before Trading in Crude Oil
- Market Volatility: Crude oil prices are highly volatile, impacted by geopolitical events and supply-demand shifts, complicating short-term predictions. Traders can manage this risk by employing diversified strategies, hedging with futures, and staying updated with reliable market information.
- Regulatory Environment: Adherence to SEBI regulations and compliance with rules set by commodity exchanges like MCX is also essential. Staying updated on government policies, environmental regulations, and tax implications ensures smooth trading operations.
- Economic Indicators: Monitor global economic growth, as it directly influences demand for crude oil. A strong economy generally leads to higher demand.
- Renewable Energy Trends: Consider the growth of renewable energy sources, as they may compete with crude oil in the long term.
Crude Oil Expiry Date Calendar 2024
Contract launch calendar for Crude Oil for the year 2024
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Contract Month
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Contract Expiry Date
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January 2024
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January 19, 2024
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February 2024
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February 16, 2024
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March 2024
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March 19, 2024
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April 2024
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April 19, 2024
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May 2024
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May 20, 2024
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June 2024
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June 18, 2024
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July 2024
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July 19, 2024
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August 2024
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August 19, 2024
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September 2024
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September 19, 2024
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October 2024
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October 21, 2024
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November 2024
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November 19, 2024
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December 2024
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December 18, 2024
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How to Trade in Crude Oil via Angel One?
- Open a Demat and Trading Account: First, open a Demat and trading account with Angel One.
- Activate the Commodity Segment: Once your Demat account is ready to trade, activate the commodity segment to trade crude oil contracts and other commodities.
- Monitor the Market: Track exchanges like MCX (Multi Commodity Exchange) and NCDEX (National Commodity and Derivatives Exchange) to stay updated on live crude oil prices, market trends, and relevant news.
- Place Your Trades: Use the Angel One trading platform and leverage indicators like Bollinger Bands, RSI, and MACD to build your commodity trading strategy.
- Manage Your Risk: To control your risk and guard against big losses on your trades, use measures like stop-loss orders.
