If you are trading oil, then you will want to keep an eye on particular news items that can affect the price. There are many news releases that can move the price of oil, and some of them, such as an announcement of sanctions or action by OPEC, cannot be readily anticipated. Others however are issued on a regular basis.

For instance the crude oil inventory level is released on Wednesdays, and reflects how much oil is being stored. The simplistic view is that if there are greater stocks of oil than the previous week, the price of oil will drop; conversely, if there is a shortage of oil it would seem that the price should go up. This is a general guide, and it does not always work out this way. In a similar way to how stocks and shares perform, you can find that the market has already priced in any news that is expected, and the confirmation release of data may even cause a move in the opposite direction.

When you are watching key data releases for trading hints, the dates and times are of great importance. When information is issued, there will in all probability be an effect on the market. However, some times you would be wise to let the market tell you first which way it wants to go before you trade, rather than assuming the direction.

In addition to the expected effects, there may be other factors that are realized at the same time, such as activity in other areas of the world, which overpower any price effect caused by inventory variations. It is also worth noting that gasoline supplies may increase due to a lack of demand even when crude oil quantities are falling, and this may cause a price drop.

It is accepted that total oil reserves in the world are being used up, and that further extraction, such as the oil sands projects, will be at greater expense. Nonetheless, oil companies often affect prices by their announcements about reserves, such as discovering new fields, or corrections in the quantity of oil reserves in existing fields.

Perhaps the most important and dramatic effect on oil prices is from political instability, particularly in the Middle East, which has become more prevalent in recent years. This again is often difficult to anticipate in advance, although general unrest can provide an early indication.

If trading on a longer time span, then you can take into account factors such as the general economy and seasonal factors. The recession has led to people driving less, both from losing their jobs and from an effort to cut their commuting costs by car-pooling or working from home.

The seasonal factors affecting the price of oil are fairly well-known and obvious. During the winter there is a demand for heating oil, which varies depending on how severe the weather is. Most of the oil for heating will be used in the northeast, given its climate and population density, so the weather there is particularly important. A lesser effect is the impact of a hot summer, which can affect the price in two ways. Firstly, with a “good” summer, people will tend to travel more and use more gasoline; secondly, some oil is used for electricity generation and that will be more in demand if the weather is hot and calls for air conditioning.