Crude oil Hitting a 3 years high as US crude inventories fell
- US crude inventories fell more than expected
- geopolitical tensions weighed on overall
- OPEC supply cuts agreed
US crude inventories – US crude rose to $63.4 a barrel and the Brent crude hit $69.3
Oil prices continued to rise on Wednesday after EIA data showed US crude inventories fell more than expected last week and as OPEC supply cuts agreed last year and geopolitical tensions weighted on overall sentiment.
US crude inventories
The US crude rose to $63.4 a barrel and the Brent crude hit $69.3 a barrel. Historically, Crude oil reached an all time high of 145.31 in July of 2008 and a record low of 1.17 in February of 1946.
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Commodities Buyers and Producers
The sale and purchase of commodities is usually executed through futures contracts on exchanges that standardize the quantity and minimal satisfactory of the commodity being traded. As an example, the Chicago board of trade stipulates that one wheat agreement is for five,000 bushels and also states what grades of wheat can be used to meet the settlement.
There are sorts of traders that change commodity futures. The first is customers and producers of commodities that use commodity futures contracts for the hedging functions for which they were first meant. Theses buyers truly make or take delivery of the actual commodity while the futures agreement expires. As an example, the wheat farmer that vegetation a crop can hedge towards the hazard of dropping money if the charge of wheat falls before the crop is harvested. The farmer can promote wheat futures contracts while the crop is planted and guarantee a predetermined price for the wheat at the time it’s far harvested.
Theses traders in no way have the desire to make or take transport of the real commodity while the futures agreement expires. Among the futures markets are very liquid and have an excessive degree of each day variety and volatility, making them very tempting markets for intraday buyers. A number of the index futures are utilized by brokerages and portfolio managers to offset threat. Additionally, since commodities do now not generally exchange in tandem with equity and bond markets, some commodities can also be used correctly to diversify a funding portfolio.
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