Oil – Brent
Brent Oil, or Brent Light Sweet Crude Oil, is fast becoming the global benchmark for the oil industry specifically, and the energy market in general. It’s a favourite amongst traders, because of the large price swings that occur, and the fact that it is so closely linked to the global economy.
Factors influencing price of Brent Oil
Bent Oil is extracted off the coast of Europe, which means its demand is closely linked to the economies of Europe and Africa, as well as the global economy. The price of Brent crude is affected by a variety of factors similar to the WTI benchmark.
- To understand what drives oil prices, you need to understand the issues affecting both supply and demand.
- Demand is driven by the level of economic activity around the world, or more specifically, expectations around future economic growth. That means consumer spending, industrial activity, interest rates and inflation are all important factors to consider.
- Demand: When the global economy steadily increases there is more demand for oil. However, it is important to remember that markets are always looking towards the future, therefore, the price of oil will reflect the expected growth of the economy. The growth of the economy boils down to consumer confidence, inflation levels, interest rates, and political and economic events.
- Supply: The Organisation of Petroleum Exporting Countries (OPEC) has always had very tight control over the production and supply of oil, more recently this grip has been seen to have loosened but that is not to say that governments, businesses, speculators, consumers, and traders around the world still keep a close eye on OPEC's every move. OPEC's supply policy can be majorly influenced by political tensions and events occurring between countries, this will inevitably then cause the price to shift.
Advantages and disadvantages of trading Brent
Reading Brent historical data
The Brent Crude Oil chart gives a good indication of how much prices can move, both up and down. In the lead up to the financial crisis in 2008, global growth and China’s growing economy led the Brent per barrel price to trade as high as $140.
After global markets crashed, concerns about the global economy saw the price fall to as low as $36.61. Price recovered as markets recovered between 2009 and 2011. At this point, new oil and gas production in the US caused prices to fall back to as low as $27 in early 2016.
With prices below $40, speculation of marginal produces halting production triggered a new bull market. Prices fell slightly again in early 2017 in anticipation of OPEC members increasing production. However, when a OPEC announced an extension of their production cuts, prices once again resumed their uptrend.
How can I trade Brent online?
If you are interested in trading oil then it is worth following the current price action and news around Brent Crude oil. You will find it interesting to see how the two work hand in hand to influence the price of Brent Crude oil. Opening a live or demo account with Eightcap will provide you with access to live price charts so you can follow the action closely. We also offer CFDs on Brent Crude Oil, so you can take long and short positions through the use of leverage.