oil mining

According to many, it is the cause of international wars and tensions. What is certain is that oil continues to be one of the most important commodities in the economy of our times. Most countries out there produce this precious commodity. South Sudan is one perfect example.

However, the country has witnessed several cases of instability, which has affected oil production and exportation.  There are several other countries in the world experiencing the same. Others have greatly benefited from the production of this precious commodity.

What is Oil?

raw oilOil is a primary form of combustible energy. Fuels (i.e., the material that can burn) are mainly made up of hydrogen and carbon. It is no coincidence that the compounds formed by these substances are also called hydrocarbons.

Petroleum, the crude oil extracted from deposits inside the upper layers of the earth’s crust, is a mixture of different hydrocarbons, the composition of which varies according to the place of origin. In addition to hydrogen and carbon, oil contains other substances that are not essential for combustion, called “impurities” (such as sulfur).

The term petroleum comes from a Latin word that means “rock oil.” It is the raw material for a huge variety of processed products. It is rarely used as it is found in nature but is processed to obtain numerous derivatives (LPG, petrol, naphtha, kerosene, diesel oil, lubricating oil, bitumen).

How to Invest in Oil

oil businessBut how do you exploit (or attempt to do so) the fluctuations in the price of oil? Naturally, this is not done by buying or selling the raw material directly but by resorting to ad hoc financial instruments, which more or less faithfully replicate the trend of crude oil. The right assets are the so-called ETCs (Exchange Traded Commodities). These instruments are issued against direct investment by the issuer directly in physical commodities or in derivative contracts.

The ETCs on the market are starting to be numerous, and in order to choose the most suitable one, experts recommend evaluating some parameters, such as management costs, liquidable costs (i.e., the ease of leaving the position), and taxation. There are different platforms that usually list these ETCs. You can visit them to make your comparisons, which is vital for your decision making before engaging in this trade. How about you engage in this trade to reap the benefits.