Differences between Investing vs Trading
Differences between Investing vs Trading
XBRUSD is the ticker used for the spot commodity, Brent Crude Oil (UK Oil). It’s known as a spot commodity because you buy it on the spot, i.e. the price you pay for the commodity is whatever it is at the time. Brent Crude Oil is produced in the North Sea, off the UK coastline.
It’s sometimes known as British Petroleum, and it sets the benchmark for over 60% of the world’s oil purchases. This is because a lot of the oil produced in Europe, the Middle East and Africa is priced relative to Brent Crude Oil. Because of this, the XBRUSD trading market has a high degree of liquidity. Moreover, the XBRUSD price has global significance. Indeed, with oil still an integral source of energy, there’s a constant demand for it. Although supply and demand ebbs and flows, Brent Crude Oil is a popular commodity. Therefore, the XBRUSD trading markets are often affected by geopolitical and economic events.
Brent oil and other commodities
There is a well-known saying on Wall Street that "commodities always move in tandem." By this, it is meant that the prices of different commodities (e.g. gold, oil WTI, natgas, silver, platinum) are often highly correlated with each other. In other words, when the price of one commodity goes up, the prices of other commodities often tend to follow suit. There are a number of reasons for this strong relationship between commodities.
One is that commodities are often used as inputs in the production of other goods and services. For example, crude oil is used to produce gasoline, which is then used to power cars and trucks. As the price of crude oil goes up, the price of gasoline also tends to increase. This ultimately leads to higher prices for many other goods and services as companies pass on their higher costs to consumers. Another reason for the close relationship between commodities is that they are often traded in similar markets and subject to similar economic forces.
The price of XBRUSD is based on a single barrel. For example, if the XBRUSD price is quoted as $40, that means the price is 1 XBR (i.e. barrel of Brent Crude Oil) costs $40. The price of Brent Crude Oil can and does vary depending on global events.
Regional and global economics can affect the XBRUSD price chart, as can political instability and the US dollar’s performance. Supply issues or changes in demand will also change the value of XBRUSD. Crude oil reports, which are released weekly, also have an impact on the market. Finally, renewables will influence the future of XBRUSD prices. With the move toward environmentally friendly products, demand for Brent Crude Oil could decrease. This, in turn, will see energy companies pivot and invest more in renewables.
Why trade XBRUSD? Brent Crude Oil is an essential commodity, but its price can fluctuate based on industry reports and global events. Therefore, having the ability to speculate on price increases and decreases makes XBRUSD CFDs an attractive option.
Investing directly in barrels of Brent Crude Oil (i.e. owning the underlying asset) requires you to buy/sell futures contracts. Futures require a larger amount of starting capital than CFDs. That makes them more suited to experienced investors. For the general investor, trading XBRUSD CFDs can be a better option.
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* The spreads provided are a reflection of the time-weighted average. Though Skilling attempts to provide competitive spreads during all trading hours, clients should note that these may vary and are susceptible to underlying market conditions. The above is provided for indicative purposes only. Clients are advised to check important news announcements on our Economic Calendar, which may result in the widening of spreads, amongst other instances.
The above spreads are applicable under normal trading conditions. Skilling has the right to amend the above spreads according to market conditions as per the 'Terms and Conditions'.
Why Trade [[data.name]]
Make the most of price fluctuations - no matter what direction the price swings and without the restrictions that come with owning the underlying asset.