You must have heard about the oil industry; do you know how investors navigate the multi-billion-dollar industry to make money? Let’s give you a bit of an introduction.
Crude oil futures are financial contracts that obligate the buyer to purchase a specific quantity of crude oil at a predetermined price on a future delivery date.
These futures contracts are traded on regulated exchanges and serve as a way for investors to profit from the future price movements of crude oil.
Derivative investments, including crude oil futures, derive their value from the performance of an underlying asset, in this case, crude oil.
Investors don’t own the physical commodity but instead, trade on its price movements.
Derivative investments allow investors to gain exposure to commodities like crude oil without having to directly purchase or store them. It is the most popular and common way to earn from the energy industry; hence, many investors don’t take delivery.
Investors benefit from crude oil futures in several ways:
Hedging: Participants in the oil industry, such as producers or refiners, can use crude oil futures to hedge against price fluctuations. For example, an oil producer can sell futures contracts to lock in a future selling price for their oil, protecting themselves from potential price declines.
Arbitrage: Traders can exploit price differences between the spot price (current price) of crude oil and the futures price. By buying low in the spot market and simultaneously selling high in the futures market (or vice versa), they can profit from these price differentials.
Regarding inflation, crude oil is often considered a hedge against inflation for several reasons:
- Intrinsic Value: Crude oil is a tangible asset with intrinsic value and serves as a critical input in various sectors of the economy, including transportation, manufacturing, and energy production. As the general price level rises due to inflation, the value of commodities like crude oil tends to increase as well.
- Demand-Supply Dynamics: In periods of inflation, demand for commodities such as crude oil may increase as investors seek assets that can preserve their purchasing power. Additionally, supply constraints or disruptions can exacerbate price increases, further driving up the value of crude oil.
- Currency Depreciation: Inflation often coincides with currency depreciation, as central banks may engage in expansionary monetary policies to stimulate economic growth. Since crude oil is priced in US dollars in the global market, a weaker dollar due to inflation can lead to higher oil prices.
By investing in crude oil futures, investors can potentially benefit from these inflationary trends by capturing the price appreciation of crude oil, thus preserving the real value of their investments.
In a world driven by energy, opportunities abound for those who dare to seize them. Welcome to the forefront of the global energy market, where fortunes are made, and futures are shaped.
Whether you’re a seasoned trader or investor looking to refine your skills or a newcomer eager to learn the ropes, this event is tailored for you.
A team of experts will guide you through the complexities of crude oil futures, equipping you with the knowledge and tools needed to navigate this dynamic market with confidence.
Now, are you ready to unlock the potential of crude oil futures? Join the webinar for an exclusive Zoom meeting where the exciting world of oil trading will be delved into, uncovering strategies and insights that can supercharge your portfolio.
Don’t miss out on this unique opportunity to gain a competitive edge in one of the world’s most lucrative markets. Reserve your spot today and embark on a journey towards financial success.
Crude oil futures are where opportunity meets expertise. Join the derivative investments learnings and ignite your trading and investment potential.
How to Register
To be a part of the program, register via the link.
Destiny Eseaga 
Staff Writer