Is It Worth Investing in Oil in the USA

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Investments in commodity markets traditionally attract the attention of investors. What assets to choose in 2022 and how volatile are oil prices in order to benefit from investments in it? Prices in commodity markets often change dramatically, so you need to know where to get additional funds if necessary. Payday Depot is ready to provide them to you at the first request.

What Determines Commodity Market Price Volatility

Starting to invest in raw materials, it is necessary to understand what factors determine the price dynamics. Then, following the news, you can predict a fall or rise in the value of an asset and take the necessary actions: sell or purchase it. Here are some of these factors:

  • Various restrictive actions by government agencies that affect the reduction in demand
  • Growth of competition due to the entry of new players into the market, which dumps prices
  • Various possible agreements between countries on the volume of raw materials production
  • Implementation of new technologies that reduce the cost of production
  • Growth in demand in developing countries due to increased industrial production

Why Investing in Oil Is Profitable

Mankind is constantly looking for new sources of energy. Some analysts are ahead of the curve and say demand for oil has peaked and is being replaced by demand for new energy sources. Therefore, it will no longer grow in price, and it is not profitable to invest in it. Is it so?

Can “Green Energy” Replace the Use of Oil?

Unfortunately, the hopes placed on green energy have not justified themselves yet. The extraction of energy with the help of the sun, wind, and other alternative sources shows its unpredictability. It is too early to talk about the reliability of these sources. Therefore, oil, like gas, does not lose its relevance.

Electric Cars Have Not Displaced the Demand for Oil

The fight against pollution is taking many forms, including a massive shift to electric vehicles. However, the consumption of refined oil products does not decrease for a number of reasons:

  • Rising demand for conventional cars in rapidly growing economies such as India or China
  • Use of diesel fuel for trucks and other heavy equipment employed in industry and construction
  • Active use of plastics in all spheres of life

Oil Prices Always Rebound

Even after short drops, oil prices tend to recover relatively quickly. This happened in 2020, when, due to the pandemic, oil prices fell to $18 per barrel. However, in 2022, its cost is above $100 per barrel, and a jump to $140-150 per barrel is expected during the summer.

Investments in oil are made through the acquisition of shares, ETFs, direct participation (DPP), leases of oil production rights, etc. Whatever type of investment you choose, it will be a good decision in your overall strategy, especially for long-term investments. Payday Loans will support you in your investment projects in oil. Determine your investment method and remember that some of them are subject to tax incentives. This makes investing in oil even more profitable in the USA.

 

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