International oil trading is the trading of oils especially crude oil across countries and continents to allow and meet the demands of nations or to fulfill individual, commercial or industrial needs. Oil is traded by a trader company which is categorized as an oil trader. An oil trader is a commodity broker who buys and sells various commodities which include coffee, grain, non-ferrous metals, gas, and sugar. They are brokers with specializations in buying and selling crude oils.
Oil traders sit comfortably and track movements in the market and make quick decisions regarding the purchase or sale. So, they make a lot of money for their clients. Their decision-making is usually based on the smallest market movement. They communicate and meet with their superiors along with their contracting oil companies to provide them with updates on the regular operations. Crude oil is the world’s primary energy source. This makes it a very popular commodity to trade. It is a naturally occurring fossil fuel, which can be refined into various products like gasoline (petrol), diesel, lubricants, wax, and other petrochemicals. It is highly demanded and traded in volume. Brent crude is the world’s benchmark for oil with almost two-thirds of oil contracts traded under the flag of Brent oil. WTI is America’s benchmark oil, it is a slightly sweeter and lighter oil compared to Brent.
While trading oil, the two factors play an important part and must be kept in mind. These factors are “Demand” and “Supply”. Oil supply has various factors that are analyzed to manage outbreak supplies and these also contribute to the price setting of the oil. These factors are “Outages or maintenance” in key refineries around the globe. Either maintenance or outages in the oil pipelines or refineries can put a significant effect on oil supplies and will influence the prices immediately. As happened in the Libyan civil war back in 2011, prices got a 25% raise just in space of two months. The next factor is “OPEC (Organization of the Petroleum Exporting Countries)” production cuts or extensions lead to changes in the price of oil, and “Oil Suppliers” like the top global oil suppliers, will impact the supply as well as the price of the oil being traded in the international market. The next considerable thing is the “Demand” for the oil in the international market which is influenced by various factors like Seasonality, as in hot summers, increased activities lead to higher oil consumption while cold winters cause people to consume more oil products to heat their houses Another factor is Oil Consumers, the largest consumers of oil have been developed nations such as the U.S. and European countries. However, in recent years, Asian countries have also gained a boom. Any slowdown from them could affect oil prices and demand may fall. Expert oil traders follow a strategy while trading. A comprehensive crude oil trading strategy could include Fundamental Analysis, Technical Analysis, and Risk Management. All these analyses are done to carry out the oil trade and to earn a reasonable profit.