1. US Dollar The global crude oil market is priced in US dollars. The US dollar floats freely and is affected
by interest rates and fiscal policy as well as other factors. If the US dollar drops, Americans feel the pinch more acutely
than Europeans or Japanese buying oil with stronger currencies, and vice versa.
2. OPEC Members of the Organization
of Petroleum Exporting Countries (OPEC) export about 55% of the oil traded internationally. Therefore, OPEC can have a strong
influence on the oil market by increasing or decreasing their production. Occasionally, OPEC works with non-OPEC producers
such as Mexico, Norway and Russia to have a greater impact on global supply.
3. Geopolitical Risks Supply shocks
in Venezuela, Nigeria, and the Middle East are becoming more frequent and can dramatically impact global oil prices.
Weather A very hot summer or very active driving season can increase the demand for crude oil and cause prices to move
higher. An extremely cold winter can increase the demand for heating oil, which is made from crude oil, and causes prices
to move higher. A hurricane in the Gulf of Mexico can cause oil prices to spike because of the potential impact it may have
on: offshore oil platforms, foreign shipments of oil, and refinery operations.
5. Inventory Reports There are
two major weekly inventory reports that are helpful in your research and trading of crude oil futures and crude oil options.
The American Petroleum Institute publishes their report on Tuesdays, and the US Energy Information Administration publishes
their report on Wednesdays. These reports are very closely watched. They summarize crude oil and refined product inventories
and refinery utilizations rates in the United States.
These are just some of the basic fundamentals to keep in mind
when you are considering a trade in the crude oil market. Therefore, before opening up a commodity account to trade crude
oil, you should consult with a licensed commodity broker that follows the crude oil market to discuss investment strategies.