Why Trading Commodities Like Oil Is Still Very Profitable In 2021
Introduction
Crude oil has remained one of the top investments for years. Some investors who are specifically investing in commodities are comparing it with gold. But 2020 is different, and the US crude oil (WTI crude) futures slipped to negative in April. During the pandemic, many investors wanted to exit, and the value dropped sharply.
However, crude oil managed to recover the losses, and it’s hovering around $45 when writing this article. As we are moving towards 2021, it can be profitable to trade crude oil. Here we will discuss the performance of crude oils in 2020 and price prediction for the next year and beyond.
Performance of Crude Oil in 2020
The price fluctuation in crude oil started in 2019 after a series of explosions in the Saudi Arabian oil processing plant. Consequently, the production of oil was reduced by 50 percent, and the prices increased by 15%. After that, it fell lower to gain another price pick up till January 2020.
The price of WTI crude skyrocketed in January up to $63 per barrel due to the assassination of Iran’s General Qasem Solemani by the United States.
After the resolution of the US and Iran, the price changed its flow. Along with that, the effect of the coronavirus pandemic brought the price lower again. Due to the lockdown, every industrial activity, traveling, businesses stopped, and the price of crude dropped. Further, the Saudi Arabia-Russia dispute brought the price of crude oils even lower in March 2020. It was the lowest ever price of crude oil since 2002.
The price fluctuation continued till September 2020. Due to the volatility and high pressure, most of the energy sectors bankrupted. Although the world is recovering, there is so much uncertainty whether crude oil will disappoint investors or it will regain its previous value in 2021.
Oil Price Prediction 2021
Due to the pandemic, the oil price has been dramatically affected. Even though the price has recovered to some extent, there is still not enough demand, especially for jet fuel. For the short term price forecast, experts predict that the oil price will not gain any significant momentum until the recovery of demand for jet fuel.
However, what will be the demand and oil price in the next year? Ten investment banks predict that the demand for Crude oils will rise towards the fourth quarter of 2021. As per the prediction, the price will increase up to $10 per barrel from the current price. However, the value will still be less than the pre-pandemic price of crude oil.
If you want to invest in crude oils in 2021, here are a few things to consider and learn how to trade.
How to Trade Crude Oil in 2021?
It doesn’t matter in which asset you invest in; the first thing that you should consider the risk involved. Trading oil is similar to other assets. You need to learn about money management, the latest trends, and learn from experts’ opinions. Consider visiting bitcoin trading if you are serious about trading crude oils.
You can try CFD trading that allows you to gain profit irrespective of the market movements. However, you need to learn about technical analysis and a few concepts related to CFD trading.
Closing Thoughts
Trading commodities like oil can be profitable in 2021 if you can build a profitable system. If you are a new trader, start learning about different concepts of trading. Keep one thing in mind; start with a small amount to practice until you develop a profitable system.
Remember, you should never invest all your money in one type of asset. It doesn’t matter how great the opportunity looks; always invest the amount you can afford to lose. In case you need any guidance, never hesitate to consult a financial advisor.
