Trading energy

Trading energy

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Commodities are increasingly popular to invest in. But commodities are a wide range of products that are being used in either consumption or production. Therefore, different commodities are affected by different external factors. To sharpen your research, we've asked our Head of Commodity Strategy, Ole S. Hansen, to outline what factors are most relevant to pay attention to, when diving into the four commodity subgroups, energy, industrial metals, precious metals and agricultural commodities.
 
Here we look at what mainly affects energy commodities. Energy includes among other things crude oil and refined products like gasoline, diesel and natural gas. The price of energy is ultimately determined by supply and demand. That balance can be impacted by producers adding or withdrawing supply, geopolitical disturbances, which more often than not can lead to a reduction of supply. The demand side primarily depends on the level of economic activity - if it’s picking up, energy tends to be in demand. Energy is a fundamental resource that every home and business needs, so increases in demand without additional supply may cause inflation and lower growth through higher cost of production.

What to pay attention to, when researching energy:

How to read the graph: The graph indicates, which factors could have the greatest impact on a given type of commodity. The further away from the center the line is, the greater the influence that specific topic has.

Check out any of the other three subgroups:

Note that this should be used only as inspiration and neither should be seen as a recommendation to invest in the asset class, nor should it be used as the only piece of information about whether it fits your investment strategy, portfolio and risk profile. More research is required to make investment decisions.

 

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