This question is designed to evaluate your grasp of basic economic principles and their direct impact on energy trading. When answering, start by defining supply and demand and explain how these forces interact to determine prices in the market. Use specific examples related to energy commodities like oil, gas, and electricity to illustrate your points. For instance, discuss how geopolitical events, natural disasters, or changes in production levels can affect supply and demand, and consequently, prices. Highlight your ability to analyze market conditions and make informed trading decisions based on these principles. Example: 'Supply and demand are crucial in energy trading because they directly influence the prices of commodities. For example, if a major oil-producing country cuts its output, the reduced supply can lead to higher prices if demand remains constant. Conversely, if there's a technological advancement that makes renewable energy cheaper and more accessible, the demand for traditional energy sources like coal might decrease, leading to lower prices.'
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