Oil, crude oil, petroleum

    By
    Andrey Orlov
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    Crude oil (or petroleum) is one of the most traded commodities. It is a fossil fuel, and one of the world’s most important natural resources. Derivatives of oil include gasoline (petrol), kerosene, heating oil, various gases, lubricants and waxes

    There are four major price benchmarks which help facilitate the trading of oil – the Brent Crude, Dubai Crude, West Texas Intermediate and OPEC Reference Basket.

    Oil is a finite, non-renewable energy resource, and its availability is a source of great economic and political agitation. Large oil producing countries such as Saudi Arabia, Russia, Iran, Canada or Norway draw a significant share of their economic power from exporting oil.

    Oil and forex trading

    Due to its volume and importance, oil trading can have a significant impact on the price movement of currencies. Some currencies, such as the Canadian dollar (CAD) are even referred to as “petrocurrencies”.

    For example, the United States buys oil from neighbouring Canada. To do this, buyers need to convert US dollar (USD) into CAD. This increases demand of the CAD and thus influences the currency pair USD/CAD.

    Read more on the relation of commodity prices and currency markets:

    Economic indicators and their impact on currencies