Trading Energy Futures Like The Gasoline, The Heating Oil & The Natural Gas Can Make You A Fortune
We all know the importance of oil for the global economy. In
the summer of 2008 when crude oil prices skyrocketed from
$60-70 to more than $140 per barrel in a matter of just few
months, the global economy came to a screeching halt. Energy
is the driver of any economy. When energy prices go up, the
cost of living increases and inflation takes hold of the
economy. Energy will be the focal point of the global
economy for many many decades. Without energy no economy can
function. Imagine passing this winter without heating oil
heating your house. This should tell you the importance of
energy in our lives. Trading energy futures like crude oil,
heating oil, gasoline and natural gas has made many people a
fortune. The good thing is that you too can trade these
futures and profit from something that is the get more and
more important in the forseeable future.
The world's largest energy futures exchange is the New York
Mercantile Exchange (NYMEX). NYMEX trades futures contracts
for crude oil, natural gas, heating oil, gasoline, coal,
electricity and propane. Visiting the NYMEX website can give
you a lot of useful information about calendars and the
margin requirements for each contract.
For smaller traders, NYMEX also offers e-mini versions of
these contracts for oil and natural gas with much lower
margin requirements. These e-mini oil and gas futures
contracts also get traded on the GLOBEX network of Chicago
Mercantile Exchange (CME).
Oil is the center of the universe not only for the industry
and the overall economy but also the financial markets. Oil
prices and interest rates usually move in the same
direction. Rising oil prices leads to inflation in the
economy. Rising inflation forces Central Banks to increase
interest rates. Then there is the peak oil theory that says
that all the known oil wells have been dug and we have
entered a period of decreasing oil supply coupled with
increasing demand. In the next decade, oil prices are going
to skyrocket.
Energy demand especially for heating oil, natural gas and
gasoline is extremely seasonal and cyclic in nature. In
winters, our houses need heating oil and natural gas for
heating purposes. During summers people tend to drive their
cars long distances on vacations.
During the spring, refineries switch production from heating
oil to gasoline. This brings a lull in oil prices as
production in most of the refineries slows down. Now as an
energy futures trader, you need to keep a close eye on the
US EIA (Energy Information Agency) and the API (American
Petroleum Institute) weekly supply data reports. These
reports give key insight into the supply situation of these
commodities!
In addition to trading crude oil futures, you can trade
gasoline futures as well as heating oil futures. Gasoline
accounts for half of the US oil consumption. Gasoline prices
tend to follow the crude oil prices. So going long on crude
oil futures and short on gasoline futures can be a good
strategy!
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard. Turn $200
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