Is crude oil a good investment Why is it called the king of commodities

Crude oil, often referred to as black gold, is an indispensable element for global economic development. Since the Industrial Revolution of the 18th century, it has become the cornerstone of prosperity for every nation, widely regarded as the “industrial blood” and “mother of industry”. The recent fluctuations in the international crude oil market have attracted widespread attention, with 4E emerging as a sought-after trading platform beloved by investors.
The Origin of Crude Oil Futures
The earliest crude oil futures trading can be traced back to 1972 in Dubai, a place that is now one of the OPEC member countries and one of the world’s largest oil-producing nations. At that time, crude oil futures were publicly quoted at $1.9 per barrel, while Brent and American crude oil (WTI West Texas Intermediate crude oil) began trading in 1976 at an opening price of around $12 per barrel. Despite the lower production of American and Brent crude oil, leading to limited trading volume, the integration of Dubai crude oil, American crude oil, and Brent crude oil over time has aligned the trends in crude oil prices, opening up trading to the global market more comprehensively.
During the Age of Exploration, European and American countries began resource exploitation through large-scale plundering. The origin of crude oil futures was also to address early supply shortages by preselling to high-paying buyers through futures contracts. However, the industrial value of crude oil made it a commodity coveted by all nations from the very beginning.
The Geopolitical Militarization Triggered by Crude Oil
The geopolitical militarization triggered by crude oil has become a common occurrence, with major events from the Iraq War to recent Middle East tensions being primarily related to oil. Whether it is the contest for oil exploration rights or restricting oil exports to raise prices, anything related to crude oil could potentially become a spark.
The open trading of futures shifted the industrial power of crude oil from the military domain to the economic domain, leading to economic warfare becoming commonplace. For example, the United States has twice imposed oil sanctions on Russia. The significant drop in oil prices in 2014 also resulted in Russia’s credit rating being downgraded to junk status. OPEC has also consistently used falling oil prices to combat the U.S. shale oil industry. It can be said that the theme of modern warfare invariably revolves around the industrial lifeline – oil.
The Industrial Value of Crude Oil
So, why does crude oil continue to lead in trading volume compared to gold and silver? Despite all these commodities being influenced by geopolitics and considered safe-haven assets, what sets crude oil apart?
The reason is quite simple: crude oil is a consumable energy source that disappears after combustion and must be repurchased for continued use. Additionally, crude oil is a fossil fuel with limited reserves. In contrast, gold and silver do not get consumed after purchase. Therefore, the production of these two metals will gradually increase, while crude oil is being consumed daily, resulting in a continuous decrease in total reserves. Furthermore, gold and silver have no practical value in themselves; their value is collectively assigned by people.
Before the industrial era, humans primarily used seven metals: gold, silver, copper, iron, mercury, lead, and tin. Gold, due to its resistance to rust, good malleability, ease of shaping, and unique color, became widely recognized as a valuable currency. In contrast, crude oil’s various high-molecular secondary products (such as plastics, polymer solvents) and refined petroleum products have practical daily use value. The general acknowledgment of the industrial production value of crude oil by people has shaped its inherent value.
Therefore, crude oil has become a widely recognized financial investment tool due to its inherent endless industrial value. Major investment banks like Goldman Sachs, Morgan Stanley, and others are actively attracting industry-leading talent and investing heavily in operating crude oil investment departments. This clearly demonstrates the importance of the crude oil market in the investment sector and perfectly explains why crude oil can become the king of commodities.
Trade Crude Oil on 4E
The recent continuous fluctuations in the international crude oil market have attracted global attention. In this dynamic and opportunistic market, 4E, the world’s leading financial asset trading platform and global partner of the Argentine national team, has become the ideal place for global investors to chase opportunities in crude oil.
4E supports Brent and WTI crude oil trading, allowing investors to leverage long and short positions with leverage ratios of 10-150 times, enabling them to flexibly seize market opportunities. Whether bullish on rising oil prices or bearish on falling oil prices, investors can achieve higher potential returns through leveraged trading.
The 4E platform not only supports crude oil derivative trading but also includes various commodities such as gold, silver, platinum, providing investors with diversified investment options. Among them, the performance of crude oil has sparked intense market attention, becoming the focal point attracting investors to flock in.
As the lifeblood of industry, oil price fluctuations provide vast investment opportunities. The 4E platform recently launched the Crazy Thursday event, where users trading derivatives such as bulk foreign exchange and stock indices every Thursday can receive high spread rebates. No complex calculations or additional operations are needed, as long as your trading volume meets the requirements, the rewards will be automatically credited to your account on Friday.