Senin, 08 Februari 2010

What if Oil Runs Out, Can We Still Trade in Oil Futures?


Oil will run out, there is no escape. We will finally face a world without oil. When that time comes, everything in our life will change significantly. We have become so dependent on oil that we seem to be very unprepared for the inevitable oil shortage. But will all oil traders must close its business once the oil runs out.

Luckily no!
In spite of the depletion of oil on all major wells, we still can get oil for our energy usages. The new oil is no other than biodiesel. Ok, you may thing that biodiesel is too small in amount to completely replace crude oil. It's true if we prioritize biodiesel only from plants like soy, corn or jathropha. To fully replace crude oil we need an alternative that is easy, cheap and can produce large amount of oil in short amount of time.
Palm oil is the obvious choice, because large production, cheap production. One liter of palm oil cost about $1 which is quite acceptable compared to current crude oil price. However, palm oil may not be adequate to replace crude oil. Vegetable oil demands are also increasing which mean it will compete with our cars. To fulfill both demands we may be need to clear millions of hectares of tropical rain forest, as palm trees grow better in warm and humid places. This would not be sustainable in the long run, which will damage our life significantly, if we insist on using palm trees.
Our best hope is lie on an oil type called as algae biodiesel. It needs hot places and grows on water. There is a plan to create algae reactors on deserts where it can use the heat to create oil. A research says that to fulfill oil consumptions in US alone, the algae farm must match the current corn plantation area in US, and luckily it can be planted in isolated deserts in southern USA.
So, it's likely that in 50 years...biodiesel futures trading is a huge market where we can invest on sustainable energy.

Why Oil Futures Trading is A Way of the Future?

Energy is essential for human life. Life itself will not exist without energy. Modern life is highly dependant on energy, one of them is oil. It is not only needed to run our cars, but it is also useful in manufacturing fields to produce plastics and other commodities. Oils are simply exhaustible, they won\’t last forever and their in limited supply, but the demand in the other hand is always increasing. This will translate to higher price. Oil once reached its highest price in history of $150/barrel. However economic crisis had dropped the price in to $35/barrel, if not maybe it already reaches $200/barrel already.

Economic crisis won't last forever, eventually everything will get better. Demands for energy will rise again and everyone will release their funds from savings account and get ready to invest them. Investment needs energy and oil will be needed in a huge amount.
Oil price may have stabilized somewhat now, around $80, adequately profitable for oil companies while still providing acceptable price for consumers. However, it's likely that by the end 2010, the price may creep closer to $100 when the economic recovery runs its course perfectly. With proper techniques it is possible to quadruple your fund in just two years. The key is to know when to sell and when to buy. Selling too fast, may give you negligible profits while holding too long cause you significant losses, just like when the price crashed down from $150 to $40. If you are experienced in stock market you may know about all the basics of oil futures trading. It doesn't have to be difficult as long as you can do everything prudently and following your common sense, it is 80% guaranteed that you'll walk away with a satisfactory profit.