Oil trading has provided as many unique opportunities as it has challenges for traders.
From geopolitical events to constant shifts in supply and demand, as well as ever-changing technologies, today’s oil prices are as unpredictable as ever before.
In this article, we examine the oil price, and market trends and provide valuable insights.
From best-kept trading secrets that can transform your portfolio overnight, to insider tips on how to tackle the possibilities that the oil market brings, the aim is simple: to empower you as a trader.
Oil Trading: Market snapshot
Oil prices fell on March 20 after hitting highs not seen for months in the previous session, as traders sat on their hands ahead of the release of the US Federal Reserve’s interest rate policy.
At 1425 GMT, Brent oil futures for May delivery fell $1.20, or 1.4%, on the day to $86.18 per barrel.
The US West Texas Intermediate (WTI), delivery April next, which expires at the end of Wednesday’s trade, fell by $1.49, or 1.8%, to $81.98.
The May WTI contract also fell, by $1.28, or 1.6%, to $81.45 a barrel.
Oil Trading: Resilient Market
At one stage during the day, both contracts dropped more than $1 below their previous settlement, but analysts say this is seen as a resilient market.
Before the session, Brent settled at its highest price since October 31 2022 at $87.38 a barrel, and WTI peaked at $83.47, its highest since October 27 2022.
Oil Trading: Ukraine War Disruption
Crude prices are also being driven higher in part due to attacks from the Ukrainians on Russian refinery capacity, and traders are speculating what that will mean for the supply and demand of crude and fuels.
Wednesday’s Federal Reserve decision will be watched closely for any hints about the direction of interest rates for the latter half of the year.
Oil Trading: US Dollar Index in Focus
The central bank is not expected to cut borrowing costs, but new economic forecasts might include reducing the size of possible rate cuts and postponing the start of policy easing in comparison with the last assessment.
The US dollar index nudged higher as investors awaited the Fed’s decision, which can also influence oil demand for buyers using other currencies.
Oil Trading: Oil Stockpile Data
The spotlight will also be on the official government stockpile data from the U.S. Energy Information Administration, due at 1430 GMT on Wednesday.
The API, an industry group, reported last week that US crude and gasoline inventories dropped, while distillate stocks rose.
On Wednesday, real estate, utilities, and banking stocks in the region led gains in stock markets in the Gulf as investors braced for the US Federal Reserve’s interest-rate decision and commentary.
Oil Trading: Dubai Market
Dubai’s benchmark index rose 0.4%, bolstered by gains in the real estate, utilities, and finance sectors, with Emirates NBD, the emirate’s biggest bank, rising 1.1%, and property developer Emaar Development climbing 3.2%.
Abu Dhabi’s main index, the ADX General Index rose for a third session, closing 0.1% higher, buoyed by a 2.6% rise in Abu Dhabi Islamic Bank and a 1.4% increase in Abu Dhabi National Oil Company for Distribution.
Oil Trading: Middle East Market
On the other hand, Saudi Arabia’s main index ended 0.5% lower, after six successive sessions of gains, with declines spread across almost all the sectors.
There was a fall of 1.1% in Al Rajhi Bank and 2.7% in Saudi Arabian Mining Co; declines in Saudi National Bank and Saudi Aramco were 0.9% and 0.6%, respectively.
Oil Trading: Qatari Index
The Qatari index also closed lower by 0.2%, as the majority of the sectors witnessed losses.
The decline in Baladna and Qatar Gas Transport was 4.3% and 2.8%, respectively, while Qatar National Bank slightly edged higher by 0.1%.
Oil Trading: All Eyes on The Fed
The Federal Reserve’s interest rate announcement is expected to keep rates unchanged but with a major focus on the updated economic and interest rate forecasts and comments from Fed Chair Jerome Powell.
All the major Gulf currencies are linked to the dollar, so surprises in US monetary policy are generally transmitted to Saudi Arabia, the United Arab Emirates, and Qatar.
Oil Trading: Eypgtion Commodity Market
Meanwhile, Egypt’s blue-chip index closed 0.3% lower in heavy trade in a fourth consecutive session of losses, after most sectors – finance, materials, industry, and communications – dropped on the Cairo and Alexandria bourses.
Oil Trading: BP Acquisition
BP acquired the refinery in 2001 after taking over Arco. BP’s head of refining, Amber Russell, said the company would cut by a third the amount of a petrochemical site.
Scrapping some capability will make the operation cleaner and smarter.
BP could process 265,000 barrels of crude oil daily in Gelsenkirchen; starting in 2025, it plans to reduce crude throughput by a third, and starting in 2025 it will begin ramping up biofuels processing at the site.
BP reported a $1.34 billion impairment charge for the Gelsenkirchen refinery in 2023, due to new economic forecasts, according to its annual report published earlier in March.
Recently, Shell announced it would close its Wesseling, Germany oil refinery by 2025, then convert the site to produce lubricant feedstocks, aligning with the company’s commitments to a lower carbon footprint.
Oil Trading: Major Canadian Pipeline
Trans Mountain Corp of Canada is beginning to fill its pipeline expansion with oil after years of delays, a top executive said on Wednesday, and the project is nearly finished.
Only a small amount of work, which will be most difficult, remains along an especially challenging 43-kilometer stretch in the province of British Columbia, chief financial officer Mark Maki told Reuters on the sidelines of the CERAWeek energy conference in Houston.
Oil Trading: Major Push for Oil
A C$34 billion ($25 billion) Canadian government-owned expansion that would almost triple the capacity to transport crude from Alberta to the Pacific Coast of Canada to 890,000 barrels a day has been plagued by construction problems, delays, and cost overruns.
Construction is scheduled to wrap up in the second quarter, betting on an uptick in Canadian crude prices when production has surged.
Trans Mountain won an exemption from the Canada Energy Regulator to use smaller-diameter pipe for this segment of the pipeline.
While the government eagerly hopes to sell the pipeline, Maki believes it’s unlikely a sale will occur in 2023 given all the unknowns that would need to be clarified before a sale process begins.
Trans Mountain is also struggling to settle a toll dispute with shippers, a matter to be dealt with by the regulator early in 2025.
Suncor, a Canadian energy company, is said to have sold one of the first cargoes to move through the expanded pipeline: In February, Bloomberg reported that Sinochem Group had agreed to buy Suncor’s first shipment of diluted bitumen.
Neither Sinochem nor Suncor returned my call for comments, and Maki declined to comment on the matter.
On Tuesday, the chief executive of China’s top oil refining company said soaring electric vehicle (EV) sales in China will reduce his nation’s demand for refined oil products by 20 million tons a year.
That’s the same amount it currently imports from Saudi Arabia.
Given China’s status as the world’s second-largest crude oil consumer, this shift in demand is big news.
Crude oil prices have risen more than 60% over the past year, pushing global inflation to multi-decade highs.
Closing this market due to a growing EV infrastructure could lead to easier economic times ahead for consumers, especially after a year of weak economic indicators.
China, which consumes 13 million barrels of oil a day, is all-in on the EV movement: Sinopec Corp, which can refine 6 million barrels of oil a day, just said it was building more than 6,000 EV charging stations with a total of 60,000 charging points, according to Dong Zhao, speaking at the CERAWeek energy conference.
The market penetration for electric vehicles has grown sharply, with more than 22 out of every 100 cars sold last year being electric, up from just four in 100 in 2020.