How to Make Money with Crude Oil Commodity Investments - dummies

How to Make Money with Crude Oil Commodity Investments

By Amine Bouchentouf

The price of crude oil as a commodity skyrocketed during the first decade of the 21st century. If this period is any indication of what’s in store for oil, you definitely want to develop a winning game plan to take advantage of this trend.

That said, crude remains a volatile commodity that’s subject to external market forces. Specifically, the Global Financial Crisis of 2008 and its aftermath resulted in a price collapse of global crude oil markets during that time period.

The period leading up to 2008 witnessed an overheating global economy, with excess liquidity, historically low interest rates, and increasing global trade. These forces (along with several others) pushed oil prices to their record highs, approaching $150 per barrel.

However as the financial crisis struck Wall Street, Europe, and the rest of the world markets, oil prices experienced an asset price deflation similar to what most other assets were experiencing worldwide. Therefore, it’s advisable to be mindful of economic forces operating outside internal market-specific considerations when trading oil markets.

Here is the price of West Texas Intermediate (WTI) crude oil on the New York Mercantile Exchange (NYMEX), 2000–2010 (dollars per barrel):


In other words, you must view spare capacity, production volumes, and other metrics inherent to the petroleum markets within the context of global market forces.

A lot of people are making a lot of money from the price fluctuations of crude and gasoline. Why shouldn’t you be one of them?