How to start investing in Oils and Gas on AvaTrade? Table of Contents

Invest in renewable energy on AvaTrade

AvaTrade offers the best CFDs on oil and other renewable energies:

  • CrudeOIL
  • NATURAL_GAS
  • HEATING_OIL
  • GASOLINE
  • BRENT_OIL

Trade oil and energy products with the most advanced trading platforms.

An advantage of trading CFDs on renewable energy, including crude oil, with AvaTrade is that you can trade freely without actually owning the underlying asset.

This gives you the flexibility to trade against price movements without having to buy or sell the underlying instrument.

If you think the price is going to go up or down, the profit and loss from online CFD trading are calculated as the difference between the buy price and the sell price.

A trader can also benefit from a short position, which occurs when a trader sells at a given price with the intention of buying at a lower price at a later time.

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What is Oil (Energy)?

Petroleum, also known as crude oil, is a fossil fuel.

Fuel is formed from the remains of plants, algae, and bacteria.

Over millions of years of extreme temperatures and densities, these materials have transformed into carbon-rich resources, which are the raw material from which fuel and other products are made.

Petroleum is a combination of hydrocarbons and paraffin or other aromatic hydrocarbons and cycloparaffins.

It is usually found in deep layers of rock, while it is sometimes found near the earth’s surface.

When it is mined and refined, hundreds of petrochemicals are transformed into numerous different products.

Crude oil is made up of approximately 80% carbon compounds and a combination of hydrogen, nitrogen, oxygen, and sulfur.

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How is the demand for Oil worldwide

Transport sector: Most of the oil used today and in the future is related to the road transport sector (based on the World Oil Outlook WOO).

In 2015, it accounted for 45% of global demand and is expected to remain at these levels until 2040.

The second sector to contribute most to the demand for oil is construction and the mining industry linked to the production of iron, steel, glass, and cement.

In third place, on the other hand, is the industrial sector, which is expected to slow down with the world increasingly moving towards a service-oriented economy.

The fourth sector for oil use is represented by the residential, commercial, agricultural industry which contributes about 11% to oil demand.

This demand is expected to remain the same over the next 20 years.

Other industrial sectors, including aviation, should grow, although a decline is expected in the long term, should the sector linked to electricity generation remain at present at around 5.3 MB/d.

Despite the slowdown in economic growth, China is expected to increase its demand for oil in the coming years.

At the same time, India is becoming the fastest-growing oil consumer, following rising income and a growing number of cars.

In addition, Brazil requires even more oil, since the country is the leader in the chemical market and in the production of polyethylene, the main raw material for the production of plastics.

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What affects the price of the Oil Market?

Oil prices change daily and are set by traders who bet on oil futures contracts.

The contract is an agreement that gives traders the right to buy oil at a fixed price based on the projections made.

Both the buyer and the seller set a future expiration date at the set price.

However, there are several factors to consider for traders.

Oil demand
Estimates are provided by Energy Information Agency taking into account seasonal fluctuations. With an increase in demand, the price of oil tends to rise.
Current production
OPEC production and US oil shale production is analyzed. With the increase in production, the price usually drops.
Access to future supply
This depends on the oil reserves of US and world refineries. Such reserves can be extracted if the price is too high.
Global Crisis
A potential crisis could increase oil processing, as traders fear that a war or shortage could limit the overall supply.

Human and natural disasters, including hurricanes, floods, and oil spills can affect the price of black gold, as well as the global availability of oil stocks.

For the novice and experienced traders interested in trading energy and oil products, AvaTrade offers numerous benefits and additional services to help you take the first step. Educational tools and Autochartist – the automated technical analysis tool that sends you daily updates, are at your disposal to help you achieve success. Dedicated customer service and account manager to answer any questions you may have; also now you can chat at any time directly from the AvaTradeGO app.

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What is the best Oil/Gas to invest online?

Energy trading refers to the trading of various energy sources such as oil, natural gas, heating oil, gasoline, and even electricity.

Energy sources tend to be quite volatile and characterized by large price swings.

They also often follow trends.

Both of these features make energy trading the ideal choice for those looking for large profit potential.

If we then consider the possibility of exploiting CFDs on renewable energy, it can become the ideal choice for the most determined traders.

There are several ways to trade energy commodities either through futures, ETFs, or indirectly through own funds.

One of the best ways to trade energies is with CFDs.

These provide traders with easy access to the market, low fees, high liquidity, and excellent leverage.

To choose the right direction of trade it is necessary to understand how energy markets are affected by economic data since energy markets tend to react quite strongly to certain reports.

The volatility and liquidity of the oil markets make them a great way to trade on the energy markets.

Oil prices can easily change by several percentage points in a single session.

This opens up great opportunities for traders. For example, the volatility of crude oil can be exploited through a strategy based on its derivatives.

The latter is based on the use of simultaneous buy and sell options.

A long straddle strategy requires traders to buy both calls and puts with the same strike price.

It is profitable if there is a large change in price, regardless of whether it is an increase or a decrease.

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