Crude oil is one of the world's most traded and in-demand commodities because it can be refined into products such as gasoline, diesel and lubricant, along with many petrochemicals used to produce plastics. Brent Crude is one of the two main types of oil (together with West Texas Middle (WTI)) used as a benchmark for global oil prices. It is a high-quality oil with a low sulfur content and is therefore relatively easy to refine into end-use products. Brent crude oil is drilled from oil fields in the Brent North, Oseberg, Forties and Ekosfisk areas, off the coast of the United Kingdom and Norway. Because of its proximity to the sea, the international transportation of these goods is quite efficient and saves a lot of costs.
Like any other commodities in general, Brent crude oil prices also depend on supply and demand factors. Historically, demand for oil has correlated with global economic efficiency. Prices often rise during periods of economic boom because more oil is needed to manufacture and transport products, and will experience decline during the economic recession. The global oil supply in general, not just the Brent oil supply, has the greatest impact on the price of this commodity. The Organization of Petroleum Exporting Countries (OPEC), which has set production quotas for its member countries, has had a great influence on Brent oil prices. However, this has not been true in recent years as the United States, which is not a member of OPEC, has increased its shale production.
Steel is an alloy of iron and carbon, often consisting of other elements like manganese, chromium, nickel and tungsten. Steel is an important commodity because it is extremely hard and has a relatively low cost, suitable for use in construction, infrastructure and manufacturing. Therefore, steel prices also correlated quite well with global economic efficiency, generally increasing and decreasing according to economic output. However, as an alloy, the price of steel depends on the cost of the constituent products and the cost of transporting them. In recent months, steel prices have also been hit hard by the trade war between the United State and China as President Trump imposed tariffs on imported steel.
The composition of steel can vary significantly depending on the end-use needs of the consumer, so there is no general standard for this alloy. Therefore, it is difficult for traders to trade because there are too many types of steel futures contracts. On IG trading platform, people can trade steel indirectly by speculating on constituent goods, specifically iron ore.
West Texas Intermediate Crude Oil (WTI), known as US crude oil on IG platform, is the second most traded oil on our list. WTI Crude is another type of high-quality oil, with a lower sulfur content and consistency than Brent crude. WTI crude oil is produced in many states of the US states like Texas, Louisiana and North Dakota, and is sold in Cushing and Oklahoma.
In the past, WTI oil prices depended heavily on US consumer demand. This is because Cushing is a landlocked area, so it is difficult to ship oil internationally, resulting in a cost difference between WTI and Brent. However, the recent arrival of the “Sea-going pipeline” to get oil from Cushing to Freeport, Texas (on the Gulf of Mexico) has reversed the situation, making it easier to export this item, and the price of WTI have been much higher, closely correlated with that of Brent crude oil.
Soybeans are known to be an important commodity in the US primarily because they are rich in protein and relatively cheap to produce. They are used to produce a variety of foods and agricultural products, such as soy flour (animal feed), soybean oil, meat and milk substitutes such as tofu and soy milk. They can also be used to produce biodiesel. The majority of soybeans are grown in the United States, followed by Brazil, Argentina, China and India.
Soybean prices may be affected by demand for animal feed, biodiesel, and meat and milk substitutes, along with factors that can affect supply such as unfavorable weather conditions. Because the United States is a major producer of soybeans, the price of this commodity may also be affected by the strength of the US dollar. Generally, soybean prices will rise (nominally) as the US dollar declines and vice versa. In 2018, speculation about China's tariffs on U.S. soybeans and their final imposition also had a strong impact on soybean prices.
>> 18 Most Traded Commodities Worldwide
>> Top most traded commodities of all time (part 2)
Source: Trader FX