Brent Oil: Price Chart, Overview and How to Invest
Brent oil is one of the two most popular instruments for investors and traders who want to access the oil market and take advantage of its unlimited potential. In this article, we will look at the specifics and particular benefits of Brent (UKOIL). We will also look at its historical development to draw conclusions for its future, and we will tell you how to analyze Brent oil yourself. Finally, we will introduce you to a broker that we consider ideal for Brent oil investing.
What is Brent Oil? Brent Crude Oil Definition and Overview
Before being a reference on the oil markets, Brent was the name of a field located between the Shetland Islands in Scotland and Norway, in the middle of the North Sea. Operated by Shell, the field was first developed in 1975 and lasted for more than 35 years. The name is an acronym related to the first letters of various Middle Jurassic formations in the field: Broom, Rannoch, Etive, Ness and Tarbert.
The term "Brent" is now used to designate a light oil made from various oils produced in the North Sea fields. Despite limited production today, the Brent oil price has become a reference on the stock markets for part of Europe, Africa and the countries around the Mediterranean.
Brent crude oil (UKOIL) is traded on international markets, from the NYMEX (New York Mercantile Exchange) to the ICE (American Intercontinental Exchange) and Rotterdam markets. The price difference between the benchmark crudes generally varies little. However, their value can fluctuate depending on regional factors, such as increasing or decreasing demand in the areas where the crude oil is transported.
Brent Oil Price History and Price Today
Brent oil price is used worldwide as a benchmark for defining price movements in the stock market. But what exactly is the price of a barrel of Brent? What influence does it have on oil price, and why was it chosen as a reference? This section will be dedicated to the study of the historical evolution of Brent, as well as the Brent oil price today.
Brent Oil Price Historical
During its history, the UKOIL price marked an all-time low of $9.55 per barrel in December 1998, and an all-time high of $146 per barrel in July 2008. The history of Brent oil prices has also been marked by several oil shocks and pivotal events which we will detail below.
After the "Glorious Thirties", industrialized countries became largely dependent on black gold. To get oil onto the markets, the major oil companies decided to lower prices. The result: revenues became equivalent to the price per barrel. In this context, Venezuela, Saudi Arabia, Iraq, Iran, and Kuwait mobilized to stabilize Brent oil prices by creating the Organization of Petroleum Exporting Countries (OPEC) in September 1960.
1973: The first oil shock in history
As the 1973 Yom Kippur War between Israel and the Gulf States unfolded, the United States intervened in the conflict by providing military support to the Hebrew state. In reaction, the Gulf countries united in the OPEC decided to reduce their production by 25%. Saudi Arabia went so far as to impose an embargo on its exports to the United States.
1979: The fall of the Shah and the arrival of the Islamic Republic
In 1979, the fall of the Shah of Iran and the establishment of the Islamic Republic led the country, one of the world's main oil producers, to an unprecedented political crisis. This resulted in a second oil shock and put a brake on Iranian oil exports. World supply considerably reduced, and Brent oil price soared.
1986: The counter-shock
The 1986 oil shock was different from the first two, in that it was more of a counter-shock. While world oil supply exceeded demand and OPEC was trying to maintain oil prices, Saudi Arabia suddenly increased its production. The OPEC countries immediately followed suit and increased their output. Brent price fell below ten dollars until an agreement was reached in 1987, and the situation returned to normal.
2008: The third oil shock
While rising Chinese demand drove up the price of oil in the 2000s, production did not follow. In July 2008, the price of a barrel of oil soared to a record high of $147. The crisis of 2008 suddenly slowed demand, and prices then fell to less than 25 dollars.
What Influences the Brent oil price?
Here’s a review the main factors that can influence the Brent oil price:
- Like all commodities, Brent oil price is determined by supply and demand.
- In terms of supply, the oil market is quite particular. The world's largest oil-producing countries grouped in OPEC regularly set quotas to limit production among its members. This allows them to maintain oil prices at their desired level. Thus, OPEC's decisions in terms of oil production quotas can significantly influence Brent crude oil prices.
- Demand comes mainly from the consumption from households and vehicles. We must thus consider the trend towards clean energy, particularly in the automotive sector with the development of electric cars. But while oil demand could decline, there is a good chance that this will not impact the Brent oil prices too negatively. Indeed, OPEC has power over prices through quotas. Also, oil reserves are shrinking, thus reducing supply.
- Every week in the economic calendar, data on oil stocks is released. These oil statistics can have a direct influence on prices. A rising Brent oil stock tend to have a bearish impact on prices, while falling oil inventories may support Brent oil prices.
- Geopolitics can also have a considerable impact on the Brent oil price. Many oil-producing countries are located in geopolitically unstable areas. Thus, local wars and terrorism can directly impact the price. Another example is the US sanctions against Iran, which deprive the market of Iranian production, thus reducing supply.
Brent Oil Chart
Below you will find a monthly Brent oil price chart of its evolution since the year 2000.
It can be seen on this long-term Brent oil chart that after more than 10 years of downtrend since the peak of 2008, oil has turned upwards, an event materialized by the return of Brent oil above the downtrend line visible in red on the chart.
This clearly suggests that the outlook for UKOIL is bullish, both technically and based on the long-term chart.
Why Invest in Brent oil Today? Points to Consider
In this section, you will find a list of what we consider to be the main advantages of Brent oil for investors and traders of all profiles.
- Brent oil is widely recognized as one of the most volatile commodities on the market. As such, it is particularly popular with short-term traders. Indeed, its high volatility coupled with leverage creates potential for considerable gains every day.
- The leverage offered by brokers on Brent oil is generally much higher than that provided on stocks, for example. This makes exciting profits on small fluctuations possible. However, never forget that leverage has a multiplier effect on profits as well as losses.
- The easiest and most common way to trade the commodity is via Brent oil CFD. However, you can also invest in Brent crude oil via Brent oil futures or Brent oil ETF.
- Brent oil is, like forex, a trading instrument with 24h quotation, 5 days a week. This strong point is particularly appreciated by beginner traders, who can trade Brent oil price live in the evenings after their professional activity.
- Finally, as we’ll see later when discussing Brent oil forecasts, several indications encourage a strongly bullish view of oil in the short to medium term.
Where Can I Trade Brent Oil ?
In order to trade Brent Oil, you need to first select an online broker. It can be difficult to choose the right one, as there are so many on the market. Criteria to look out for include regulation, competitive fees and a wide range of assets.
ZFX is a broker which fulfils all these conditions and more. It provides MT4, the widely popular trading popular platform which many traders appreciate. ZFX also allows its clients to trade stocks, indices, forex and commodities.
How to Trade the Brent Oil Easily
Buying the commodity through the broker ZFX is very simple and fast. The account opening is done entirely online, and takes only a few minutes. All you have to do is follow these next steps.
1 - Register with ZFX
For this first step, you will need to go to the ZFX broker's website, and click on “Open an account". You will then have to fill in a registration form with several personal details. This includes your phone number, which will be verified by SMS.
After filling out the form, click on "Next" at the bottom of the page. Immediately after this step, ZFX will display your MT4 login and password and invite you to download the platform.
2 - Make your first deposit
To do this, click on "Make a deposit" on the screen that is displayed immediately after registration. You will then need to choose a payment method. Let's take Mastercard as an example:
There, you’ll need to indicate the deposit amount and then click on "Confirm Deposit”. You will then be asked for your credit card information before the final validation of the payment.
3 - Account verification
Finally, you’ll need to verify your account by sending supporting documents.
As shown above, you will need to upload the documents directly to the ZFX website.
4 - Trade Brent Oil
Once your documents are validated, you can trade finally trade Brent Oil. You will do this via the MT4 platform, using the login details you were provided upon registration. Once you access MT4, you can simply look up the Brent Oil under the symbol “UKOIL”, then invest as you wish.
Things to Know Before Trading Brent Oil
Below are several tips and tricks that will allow you to start trading UKOIL successfully.
- Technical analysis is a method to analyze Brent oil price chart and identify trading signals, important thresholds and current trends. It is effective, essential even, for short-term trading. If your goal is to profit from the daily variations of Brent oil, it will be crucial to learn the basics of technical analysis.
- Oil is probably the asset that is most influenced by geopolitics. Indeed, factors like terrorism or economic sanctions can directly impact Brent oil prices and cause the price of black gold to rise or fall. Thus, oil traders need to find a good source of information covering these critical topics.
- Brokers, including ZFX, offer to test their platform with a demo account with virtual capital. This is an ideal opportunity to trade the Brent oil price live and fine-tune your trading method before applying it in the markets and investing your capital.
- Successful traders follow strict risk management rules. This means not taking positions too large compared to the capital available in your account. It also includes systematic use of stops and limits, which cap losses and automatically cash out gains.
- Finally, it is also essential to choose a good broker to trade Brent oil. You should make sure the fees charged are not too high and check the broker is regulated broker. Note that ZFX meets all these qualities.
Brent Oil Forecast, Future and Prediction
Let’s now evaluate the future outlook for Brent oil using forecasts and technical analysis.
Brent Oil Forecasts: Bank Predictions
In terms of professional analyst predictions, there are many optimistic Brent oil forecasts. For example, the investment bank Goldman Sachs expects Brent oil to exceed $90 by the end of 2021. It believes that factors such as the rapid post-covid recovery or the hurricane season, which could be worse than usual, will push oil higher.
Bank of America has an even more bullish forecast, predicting a return of oil to the major psychological threshold of $100, due to heating-related demand in the face of a harsh winter. The bank also cited a recovery in air travel as a bullish factor for Brent crude oil.
Brent oil Forecast: Technical Analysis
Technical analysis also confirms that we can expect Brent oil to rise short, medium and long term. Indeed, we can see on the Brent oil chart below that an uptrend line has been supporting the price of oil since the low in April 2021.
In addition, the 50-week moving average recently crossed above the 200-week moving average; a powerful bullish signal called a "golden cross". Finally, the significant psychological threshold of $80 occured for the first time in two years, which is also a technically bullish factor.
Bottom Line: Should I Invest in UKOil Now?
After suffering heavily from the covid-19 pandemic, Brent oil has recovered brilliantly. And despite a 400% rise from the 2020 lows, the uptrend shows no signs of weakening. Analyst forecasts and analysis of the Brent oil price chart context confirm this bullish outlook.
For short-term trading, Brent crude oil is one of the most suitable instruments, mainly thanks to its high daily volatility, which provides many opportunities. If you wish to start investing in Brent oil and take advantage of its volatility and medium-term bullish potential, you can turn to ZFX. This broker offers MT4, arguably the best platform on the market, in addition to a host of other qualities.