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Why You Have to Trade Oil Contracts

Why you have to trade oil contracts

Among the trading instruments that have fairly stable forecasts for the end of 2017 and early 2018, oil has one of the most unanimous estimations. Oil is traded through CFDs – a financial instrument that allows you to trade assets like gold and oil without having them in stock.

This type of trade enables everyone to participate in various segments of the financial market and find a suitable financial tool for themselves. Trading in CFD’s has two options for earning money, depending on the price movement: to sell a contract in order to buy back at a lower price, or to buy - for the purpose of selling more expensively.

Oil trade has changed significantly over the past 5 years – from stable growth to a sharp decline in 2014. Both representatives of the largest oil companies and experts of rating agencies agree that at the end of 2017 the price for Brent crude oil will go down and will trade at $42-43 per barrel. The reason for this movement is various events: from the increase in the production of shale oil in the US to intensifying of African suppliers in the market, namely Nigeria and Libya. As a result of these events and an increase in supply in the oil market, the cost will go down.

In early 2018, the situation should turn completely in the opposite direction. The initial public offering of oil giant Saudi Aramco will take its place, and the authorities of Saudi Arabia will try to back the successful IPO of the company's shares with slightly overpriced prices on hydrocarbon fuels. Together with other OPEC participants, the Saudis are going to take measures to reduce fuel production – this will spur traders, investors and buyers to invest in both oil itself and shares of oil production companies.

To sum it up, over the next 9 months there are 2 excellent opportunities to earn money, trading with oil contracts – from the shorting in late 2017, to the opportunity to buy oil at a lower price and sell at the peak of the Saudi Aramco IPO. Moreover, the movement of the oil price will correct the expectations from the IPO and also help to earn by trading shares of oil corporations.