Oil and Gas Industry Primer for Traders 5.00 / 5 (100.00%) 1 vote

Investing in equities and commodities are common ways for traders to begin navigating the field of investment. One of the most fundamental aspects of trading involves understanding the sector in which you plan on investing. There are numerous different companies and sectors that individuals can choose from, and a better knowledge of the field will allow traders to make more intelligent decisions. One of the most popular sectors to invest in is the oil and gas sector. By looking into a basic oil and gas industry primer for traders, you will have the opportunity to understand all of the basic terminology that comes with navigating the field. Newcomers are strongly encouraged to understand the fundamentals of all related stocks in order to understand how they can make wise investment decisions.

Understanding the industry begins by understanding where the products are harvested. Both crude oil and natural gases are substances that occur in rock along the earths crust. The gas and the oil originate from organic material, which include sedimentary rocks that are the compressed remains of plants and animals. Slowly, as the layers of sedimentary rocks are deposited onto the oceans floor, the remains of organic substances were integrated into the structure of the rocks. Over time, these organic materials begin to transform into gas and oil after being exposed to the pressure and temperature within the crust.

Because the gas and oil are less dense than the water, they will occur in large quantities all over the earth. In order to get to the hydrocarbons as they exist under the surface, wells need to be drilled with the appropriate equipment.

Certain exploration and production groups focus on finding these reservoirs and drilling into the resources underneath the earth in order to produce energy for a variety of everyday utilities. Hundreds of these companies have their stocks available for public browsing and trading purposes, and they are listed in a variety of different stock exchanges. These companies measure their oil production in barrels. Barrels are usually abbreviated as bbl. Gas production, on the other hand, is described in a standard cubic feet formula, where gas is measured in accordance with a certain temperature and pressure.

Often, the companies themselves will describe their production in the appropriate equivalent barrels and gas. Learning how to understand this equivalent is an important part of analyzing the oil and gas industry primer for traders. These numbers are an important part of understanding how well the company is doing and in what direction their services are going. Keeping them in mind, as well as looking into their general performance is a good way to measure the company itself and understand in what direction you should invest. All newcomers to such trading are encouraged to work with these companies because of how easy to navigate the financial field can be after the terminology is understood.

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