Features of GEMFOREX' BRENT Trading

  • You can trade with the same account as Forex.
  • Adopts MetaTrader 4 (MT 4)
  • No rejection and contract refusal
  • Absolutely No Hidden Markup
  • Realizes 99.79% of commitment within 0.78 seconds
  • The shortest 30 seconds account opening & Easy, speedy until start of trading

And more…
GEMFOREX continues to pursue a comfortable environment of traders, and BRENT can be used with confidence by beginners and those experienced people in Forex under the MT 4 environment familiar to BRENT.

What is BRENT

Gaining high attention as CFD trading target investment, BRENT is a light oil mined from the Brent oil field in the North Sea of England. The name BRENT is attached with the acronym of the rock classification of Broom, Rannoch, Etieve, Ness and Tarbat.

Features of BRENT

BRENT Crude oil is one of the crude oils, also called London crude oil, which determines the market for crude oil prices. It includes not only the North Sea of England but also crude oil mined from the Forties Oil Field and Oseberg, Norway Oil Field. The price of BRENT crude is one of the factors attributable to the price of refined oil in Europe and Africa.

World crude oil trading are made up of three major markets in North America, Europe and Asia. It is also characterized by unique price formation according to balance of supply of each region. BRENT is an indicator of crude oil price, and because it has a very large volume of transactions and high liquidity, it is highly popular among investment targets including CFD trading.

Incidentally, besides BRENT that are factors that determine global crude oil prices, there are Asian Dubai crude oil, Oman crude oil, North American WTI crude oil and so on. Among these, WTI crude oil can generate a lot of gasoline and diesel oil because impurities are small, so it has the most expensive and high market value. WTI crude is not imported in Japan, and Dubai crude has a big influence on crude oil price in Asia.

BRENT Transition

Brent Spot monthly

Looking at it on average, BRENT Crude oil prices remained unchanged from around 1985 until the 20th century, but prices have fallen temporarily after the simultaneous terrorist attacks that occurred in 2001. It is characterized by rising to the right from around 2004. This is due to the rapid increase in demand for crude oil with China's economic growth.

The rise in geopolitical risk in the Middle East where crude oil is produced also contributed to the surge in crude oil prices. There are also other declines in the surplus production capacity of the OPEC member countries and the accompanying supply uncertainties. In terms of the balance between actual supply and demand, supply shortages did not occur, but price increases came from pessimism towards the future.

Despite steadily rising crude oil prices, a significant decline has occurred due to the Lehman shock that occurred in 2008. The reason is that the global economy has been sluggish and oil demand has declined. Investment money was also withdrawn in the crude oil futures market, and slowly lowered the price of crude oil.

Following the collapse of the Lehman shock, crude oil prices begin to rise once the global economy has recovered. After that, although it was around 100 dollars, it starts falling again in July of 2014. This was due to the shrinking demand for oil accompanying the strong economy of China and the increase in crude oil production in non-OPEC countries such as Russia and Brazil.

※Image quotation:Wikipedia

Factors of BRENT's price movements

Decrease in production volume

The North Sea where BRENT is manufactured is located in a place surrounded by Scotland and Norway, and it cannot be said that the work environment is never blessed because of its low temperature and bad weather. In addition to these climatic features, BRENT crude oil has a decline in production and a decline in crude oil prices, so that maintenance costs for oil development are relatively high, and it falls into a vicious cycle where stable production cannot be made. There is a big feature that the increase and decrease in production affect the BRENT price.

US crude oil export

In the United States, it is a long time concerns that OPEC will affect the American economy, export of US crude oil has been prohibited. However, as we look to the current crude oil market, there are voices of doubts that the export of crude oil is not approved because there are abundant supply and export of refined goods is permitted. It is anticipated that the lifting of ban on the export of US crude oil will occur in the future, so that consumption of BRENT will decline and there is a possibility that price will have a big impact.

Geopolitical risk

The price of BRENT is linked to the movement of other crude oil prices. Many crude oil countries are politically unstable, and the influence of geopolitical risk on BRENT prices cannot be ignored. Even in Japan, terrorism and war in the Middle East region have exerted great influence on gasoline prices and petroleum product prices. Compared to the oil price accompanying the economy, war and terrorism often happens suddenly, so it is difficult to forecast. We cannot keep an eye on geopolitical risks in the future.

Financial aspects

For BRENT trading, many futures and option trading are conducted. The trading volume combined with each transaction has risen to the right, especially the increase in option trading is remarkable. On the other hand, futures trading has been on a downward trend since 2008. This is due to the sharp rise in crude oil prices, which is the reason for the decrease in the number of positions per transaction.

On the other hand, if large price fluctuations are expected on option trading with the property option to trade buying right, an active trading is being performed. However, like the futures trading, the trend that has been on the rise has stopped since 2008 and has been flat. The impact of the increase and decrease in the volume of trade on crude oil prices is significant, and it is an important factor in predicting price movements.

BRENT in the future

The crude oil market is composed mainly of WTI crude oil price. Meanwhile, WTI crude oil has a major influence on the price of the stock in the US, and skeptical voice as indicator of the international oil market is also rising. As a result, brand crude oil is gaining attention as an index reflecting the oil market that is changing to WTI.

Crude oil is indispensable to our daily lives and also a familiar investment target. Meanwhile, geopolitical risk, consumption of industrialized countries, consumption of emerging countries, decline of resources, etc. have a big influence on BRENT price. Because crude oil prices are made up of many factors, it is important to understand the factors given to the price and make it eligible for investment.