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5 Unpredictable Crude Oil Facts You Must Know

 23 Jun 2019

By now, the crude oil traders must be familiar with this in-demand trading commodity. However, there are a lot of facts about crude oil that can impact your trading decisions. Yes, you read that right! Its origin, value, and global use are some of the vital factors that have a major impact on the trading of this investment product.

Are you a regular trader of crude oil? Well, before trading this exclusive commodity, read on this post to know the surprising facts of this product. Here we go:

  1. Crude Oil is a Natural Product that can be classified into different Types

You might already know that crude oil is a natural resource. This product is composed of hydrocarbons and a reasonable amount of sulfur, oxygen, and nitrogen. Crude oil is made out of the remains of dead and decayed plants and animals that were buried deep under the surface of the earth billions of years ago. The natural factors such as pressure and heat convert these compounds into crude oil.

Crude oil can vary depending on its type and the method used to extract it. Basically, there is a light, medium, heavy and extra heavy crude oil.

  1. Crude Oil is used in all Our Daily-use Items

As crude oil is extensively used in our daily life, it is regarded as one of the most crucial energy sources on earth. The use of this natural resource isn’t confined to heating and fuel purpose; in fact, it is also used in the formation of waxes, asphalt, lubricants, and other vital products. These petrochemicals are used to create more familiar products such as clothes, plastic, and much more.

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The device you are carrying in your hands has been treated with crude oil in its development journey. The aircraft, train, truck, retail store, appliances, and even the manufacturing units require crude oil to function properly. It is pretty surprising to say that everything you see in your daily life has encountered crude oil in its production phase. Perhaps, that’s the reasons why crude oil receives a whopping demand from all around the world.

  1. 5 Countries produce almost half of the Total Global Crude Oil

There are five main oil-producing countries that are responsible for the production of nearly half of the total crude oil supplied to the world every day (i.e. approximately 92.65 barrels). In 2017, the United States was declared the top producer of crude oil, producing an average of 13 million barrels a day. Note that the term production here means the extraction of oil from the earth. For crude oil investors and traders, the production of this natural resource from the 5 major oil-producing countries plays a vital role in altering the price and market demand of the crude oil. On the contrary, the oil extracted in other than the five main countries have little to no influence in its price and demand in the market.

It is worth to note that the production of crude oil is largely influenced by some external factors such as unpredictable climate conditions and political uncertainty. For instance, unfavourable weather can hamper the extraction process within the oil-producing nations, which further results in increased crude oil prices in the world.

  1. 8 Million Oil Barrels are imported by the United States every day

It might come as a surprise to the traders, but the US imports as much as 8 million barrel of oil per day. Even though it is one of the largest producers of crude oil, it needs approximately 7.97 barrels of crude oil. There are mainly two reasons for this:

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  • Not all crude oils are the same. This natural resource may differ on the basis of its extraction and type.
  • The United States is known for its higher consumption of crude oil than its domestic production of the same.

The United States is the world’s largest producer as well as consumer of crude oil. According to the sources, the country consumed around 19.88 million barrels per day in 2017. It was also reported that the major part of the US’s crude oil was for the transportation industry.

  1. The Factors Influencing the Price of Crude Oil can be unrelated to Oil

The demand and price of Crude oil are affected by multiple factors, one of which is the strong United States dollars. The strong US dollars are capable of keeping the prices of this natural resource from increasing. As both major types of crude oil i.e. Brent and WTI are priced in United States currency, the US dollars have a strong impact on the prices of this investment product.

These were the five surprising facts about crude oil every individual planning to invest in this product should know.

Also Read: How to Invest in Crude Oil?

Also Read: Strategies for Trading the Gold-Silver Ratio

 

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