When the spread between two oil grades diverges, traders sell the most expensive one and buy the cheapest one. With a narrow, almost imperceptible spread, traders open trades in different directions when this spread diverges. Therefore, it is important to keep up to date with any news or data releases that could move the price of oil. Companies often trade oil futures to lock in advantageous prices or protect against negative moves.

There are other types, but the two are the best in terms of quality and their prices are very strongly correlated, so we will describe them in more detail here. You can find a chart of Brent crude oil in Purple Trading platforms under the name BRENT. However, if the economy is in a period of recession, demand for oil will fall and lead to lower oil prices if production continues. In periods of economic growth, the demand for oil increases to meet the needs of industries such as energy, transport, manufacturing and pharmaceuticals.

Exchange-traded funds (ETFs)

Once you feel confident in your trading strategy, open a live trading account with ATFX. Compare fee structures and consider the long-term costs of trading on each platform to make informed decisions that align with your trading strategy and budget. On March 10, 2020, the price of the commodity fell more than 30 per cent to trade at its four-year lowest of $31.02 per barrel. Such a steep slip represented the biggest single drop since the start of the first Gulf war in 1991.

• Trading oil is quite simple and very similar to trading other asset classes.
• Important legal documents in relation to our products and services are available on our website.
• Most CFD trading providers allow traders to speculate on the price of oil futures contracts, however the contact sizes are often much smaller than standard future contracts.
• The oil market is extremely popular due to the volatility caused by changes in supply and demand.

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

Sour crude oil has higher sulphur and carbon content than light crude, so requires more costly refining. There are hundreds of crude oil grades, based on their qualities, such as sulphur, nitrogen and metal content, density and viscosity. Read on if you’re interested in learning how to invest in crude oil. Harness past market data to forecast price direction and anticipate market moves. If you are reading this guide on a computer, laptop, or mobile device the chances are you are enjoying some of the comforts of modern-day life.

This data is particularly useful if you want to trade on the WTI crude oil chart. Brent crude and WTI are the two most well-known types of crude oil. In fact, Brent crude is used as the world’s benchmark for oil prices – almost two thirds of futures traded are on Brent oil. You can trade a variety of oil markets with including popular crude oils WTI and Brent Crude, as well as no lead gasoline and heating oil. When you trade US Crude oil options, you’ll be trading the price of oil options via CFDs.

Strike price

Trading within the oil markets can be a risky move, given the increased volatility throughout recent years. Where supply and demand is constantly changing, so is the price https://g-markets.net/helpful-articles/the-bull-flag-pattern-trading-strategy/ of oil. However, crude oil is a liquid commodity, meaning that it can be traded in large volumes and boasts a relatively tight spread of around 3.0 points on average.

The 10% margin offered by Capital.com means you have to deposit only 10% of the value of the trade you want to open, and the rest is covered by your CFD provider. For example, if you wanted to place a trade for $1,000 worth of crude oil CFDs with a 10% margin, you would need only $100 as initial capital to open the trade. Whether you have a positive or negative view of the crude oil forecast and predictions, you can try to speculate on the price direction either upwards or downward. There are a number of ways, depending on your preferred approach and trading strategy. OPEC and, increasingly, US policy on crude oil production have an impact on global supply and hence the price direction. Political unrest, strike action or war can disrupt crude oil production and reduce supply.

Plus500AE Ltd is authorised and regulated by the Dubai Financial Services Authority (F005651). Plus500SEY Ltd is authorised and regulated by the Seychelles Financial Services Authority (Licence No. SD039). Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN ). The margin required in percentage terms is a little higher – around 9.5% for NRML and 4.8% for MIS.

Monitor and close your oil position

However, if you wish to make an intraday trade using MIS, then the margin requirement is roughly 4.5%. Clearly, as you can see from the snapshot above, margin under MIS is just Rs.14,557/-. Brent Crude and West Texas International (WTI) are both oil grades and acting pricing benchmarks in the world oil market. Earlier in the article, we explain the main differences between Brent Crude and WTI, one of them being the location the oil comes from. Here are a few answers to help get you started if you’re considering trading crude oil.

• As the world’s primary source of energy, crude oil is a highly demanded, highly traded and very liquid commodity.
• Put simply, oil trading is the buying and selling of oil with the aim of making a profit.
• Traditionally, purchases are encouraged, meaning the swap of long trades will be positive.
• Oil commodities in an equity-only portfolio can lower the volatility, due to the absence of a correlation between the asset classes.

Once it’s time to close your position, you can either click ‘close’ or reverse your initial trade. Alternatively, you can practise trading first in our risk-free demo account. Seamlessly integrated into Trader Workstation, SpreadTrader is the single-screen command center for managing futures positions. Plus500CY is the issuer and seller of the financial products described or available on this website.

Global oil production

A potentially profitable company is always performing production drilling and has potential contracts for developing new fields. Also, the company’s stock price should not be higher than the average historical price. It’s just that different exchanges offer different types of contracts. At the time of the API and EIA data release, oil quotes often rise or fall sharply. According to the strategy, before the news is released, two pending orders, one for buying and one for selling, must be set.

If they expect prices to move, they buy a futures contract for one month and sell a contract for another month, profiting from the price spread between the two contracts. Note that there is always the risk to lose money if the price moves against your position. Options should be given the respect they deserve, which means putting in the time and effort to learn the nuances that come with this product. Master it, and oil options could open a world of new investment possibilities.

What is the best way to trade oil?

Buy Stop is set above the current price, and Sell Stop is set below the current price. Oil futures contracts are slightly different from CFDs, but it is the futures that serve as the basis for calculating CFDs. A futures contract is an agreement between a seller and a buyer that guarantees the fulfillment of delivery obligations at a pre-agreed price and time. Unlike CFDs, futures are limited in time with a specified expiration date. In addition to CFDs, there are also several ETFs that allow investors to gain exposure to the oil market. Apart from that, investors might also seek indirect exposure to the prices of oil.

If demand outweighs supply, then the price of oil will be driven up. Going long or short on a position comes with the potential for profit as well as loss. In order to mitigate risk, traders should consider taking advantage of ‘Close at profit’, ‘Close at loss’, and other key features. Successful oil traders share traits with successful active traders in all markets.

If you trade Brent as futures, the trading hours are determined by the exchange where you buy the contract. Traditionally, purchases are encouraged, meaning the swap of long trades will be positive. USCRUDE is a light North American oil that is typically a few dollars cheaper than Brent. However, if you trade USCRUDE as futures, the trading hours are determined by the exchange where you buy the contract. These products are not suitable for all clients, therefore please ensure you fully understand the risks and seek independent advice.

As the core essential of industrial production, crude oil is a crucial commodity for every nation. When major oil-producing nations may experience political instability or unexpected events, the risk of the global supply of crude oil arises. The OPEC (Organization of the Petroleum Exporting Countries) member countries usually develop timely policies on oil production and exports to secure the interest of oil-producing countries. The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Neither Schwab nor the products and services it offers may be registered in your jurisdiction.

To do this, it is not necessary to enter a commodity exchange and make transactions with physical delivery. Also, major stock exchanges in any country in the world provide the opportunity to trade futures or options and invest in ETFs. WTI crude oil (OIL.WTI) – West Texas Intermediate, is extracted in the United States, Texas.