Trading News for Beginners - How Energy News Shifts Markets

December 08, 2022 13:08

Energy news can shift the market’s focus onto different products and trends, often with dramatic effect.

As little as 50 years ago, mainstream trading and investing markets overlooked damage to the environment from emissions because there were few alternatives to fossil fuels. Over time, little by little, different perspectives began to emerge through news stories, studies, and research.

The news stories started with environmental activists and scientists back in the 1970s and slowly filtered through to respected trade journals. From there, market participants began to hear about the need to combat climate change with products using renewable energies like solar and wind.

Environmental awareness has changed our view of the products we use every day. It might surprise you that electric cars were first introduced as early as the 1820s and were favoured for their clean engines. The machines fell out of fashion when gas powered cars hit the markets in the early 1900s during which the Model T was mass produced in the US. Electric cars regained popularity in the 1990s, inspiring investment in alternative vehicle companies.

More than five decades after the environmental awareness movement started, the International Energy Agency (IEA) has predicted that renewables will become the largest source of global energy by early 2025, outstripping coal.

“Renewables are the only electricity generation source whose share is expected to grow, with declining shares for coal, natural gas, nuclear and oil generation.” IEA Renewables 2022.

The magnitude of the IEA’s projection is astounding, and the news has been carried by many respected media outlets. It’s likely to affect investment flows and change the approach taken by energy companies towards renewables. Already, the major players in energy have adopted clean power alternatives and committed to balancing their fossil fuel exploration and development with solar, wind and wave sources of energy.

Energy headlines like oil slicks and other types of environmental damage carry a lot of weight these days, encouraging energy companies to prioritize safety and environmental policies. Investors and traders are also hypervigilant towards stories when it comes to geopolitical events or damage inflicted on energy infrastructure.

Media stories are part of the evolution of energy markets. Some of the top stories in the last 10 years alone include fracking, air pollution in Asia, leaks at Fukushima, and volatility in the crude oil markets, to name a few.

OPEC’s policies

OPEC’s policies are widely reported in the world press, leading to expectations about crude oil prices and assumptions about supply and demand in the energy markets. Since OPEC’s policies are tied directly to the economic performance of its members, there’s an entire specialized and influential media sector dedicated to analyzing and reporting on the latest developments.

How to interpret energy news for beginners

When you look at the background of energy news, it’s clear how important it is for traders and investors to stay updated. Energy news can often be a catalyst for sectoral trends, sparking new product ideas and public companies and influencing energy regulators.

Considering energy news in your financial decisions often starts at home with an awareness that petrol prices are rising or falling and factoring the information into your monthly budget. Millions of other people are doing the same thing, so the question is, how will it affect the companies that supply petrol to consumers? Answering questions like these is the first step in analyzing the impact of energy news on assets that are tradeable or investable.

In short, curiosity is your friend when looking for potential energy market opportunities. 

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks

Sarah Fenwick
Sarah Fenwick Financial Writer, Admirals London

Sarah Fenwick's background is in journalism and mass communications. She has worked as a correspondent covering Swiss Stock Exchange news and written about finance and economics for 15 years.