Petroleum products are basically refined crude oil which is a naturally-occurring substance that can be found in some parts of the planet. The refined products derived from crude oil make up the backbone of the planet’s energy resources. As a result, there’s no surprise that the main types of crude oil traded in global markets offer a lot of investment opportunities.
The main types of refined petroleum products are as follows:
People have been developing and extracting oil from oil wells from as far back as 347 A.D. in China. Now it’s a massive source of global energy.
There are many names for crude oil in the industry, some are even unusual like Bonny Light and Brent Light Crude Oil. The main types of crude oil are as follows:
Heavy oil is basically denser, and light oil has a lower density. Sour oil has an excess of sulfur whereas sweet oil has less sulfur.
The global markets have a strong preference for light sweet crude oil. This is because it doesn’t take much effort to refine it before it hits the commercial markets.
Most of the crude oil in the marketplace falls in the middle, so they’re called Medium Oils. However, their low volatility makes it quite messy to clean up and it also comes with increased levels of toxicity. So whenever you hear about an accident, it probably has something to do with Medium Oils.
Like any other commodity, crude oil also has its own margin requirements and contract value. To calculate your potential profit or loss, you have to have knowledge about its key components. The value of the commodities contract is based on the present price of the market and multiplied by the actual value of the contract.
All trades are based on the margin and the margin changes based on the market volatility. But if you’re new to this investment channel, you need to be aware that the global oil market is highly complex.
There are both private and government owned companies playing various roles across the production chain. As a result, when you invest, you should also follow what’s happening with all these entities very closely.