Risk Warning: Your Capital is at Risk.

In this guide to trading crude oil, we explain how and where you can trade this popular commodity.New Delhi Stock Exchange

We list regulated brokers and platforms that are available in your country, discuss the reasons why people trade in oil, and provide some tips for understanding the oil market.

In a hurry? If you want to start trading oil right away, here are some online broker platforms available in to consider:

Disclaimer: Availability subject to regulations.

Between 74-89% of retail investor accounts lose money when trading CFDs.

Despite the advancement of renewable energy production, fossil fuels still make up most of world energy usage with oil being the most used energy source.

Since the oil trading market is subject to high volatilityGuoabong Investment. With volatility comes great risk of losses, as well as the potential for profits so it’s important to familiarize oneself with technical analysis tools to get a better understanding of daily oil trends

Online brokers and exchanges offer several financial instruments that allow you to speculate on the price of oil:

The type of financial instrument you choose depends on the following factors:

Contracts for Difference (CFDs) are contracts between a trader and a broker to exchange the difference in price between when a trade is entered and exited.

Leverages can be fixed or variable, based on the margin requirement of the broker.

Many CFD brokers provide the facility to speculate on the price of oil futures contracts but contract sizes are typically much smaller than standard futures contracts.

A crude oil CFD order can be for as little as 25 barrels (depending upon the firm) compared to 1,000 barrels for a standard futures contract.

Please note, this is an example – not a recommendation.

Here’s an example: You’re bullish on WTI oil, so you decide to buy oil CFDs at the quoted price of $60.25 to $60.50 (the lower price is for a short contract, the higher for long).

Shares are arguably the least complicated way to trade crude oil. You can trade equities in an oil company that you believe to become profitable at a future date.

There is usually a correlation between crude oil prices and oil company stock prices. But this is not always the caseAgra Wealth Management. And disasters as varied as pandemics and oil spills can make stocks plunge unexpectedly.

Interested in oil stocks? Here are the biggest listed oil companies:

Please note, this is an example – not a recommendation.

Exchange-traded funds (ETFs) are also commonly used in oil trading.

Some oil ETFs are leveraged. The two types of leveraged oil ETFs are:

For example, CityIndex offers the following oil ETFs:

Please note, this is an example – not a recommendation.

A futures contract is an agreement to buy or sell a quantity of oil at a specified date for a specified price.

These are standardized instruments for WTI and Brent; the standard contract is for 1,000 barrels of oil, so a $1 movement in price is equal to $1,000 in contract value.

Either party — the buyer or the seller — can draw up a futures contract to purchase or sell at a further date.

Here are a few important things to know about oil futures:

Here are some examples of crude oil futures:

With oil options, a trader essentially pays a premium for the right (not the obligation) to buy or sell a defined amount of oil at a specified price, for a specified duration.

Crude oil options are the most widely traded energy derivative in the New York Mercantile Exchange (NYMEX), one of the largest derivative product markets in the world.

Despite their name, the underlying basis of these options is not crude oil itself, but crude oil futures contracts.

The cost of options contracts is determined by oil price volatilityPune Wealth Management. Oil options traders often time market entry and exit strategies based on market volatility.

Start your research with reviews of these regulated brokers available in to find brokers offering oil futures, stocks, ETFs, CFDs, options, and more.

Oil trading comes with advantages and disadvantages, despite its popularity. Here’s a summary:

Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.

People may choose to trade crude oil over other commodities or assets. This depends on the trader’s experience and objectives. Some traders may choose to trade oil for:

Every market has its distinctions — oil is no different. To make the best of your time and money while trading this commodity, here are some things to keep in mind:

Crude Oil Prices – Historical

The below charts show you the Brent and WTI crude oil spot prices, both live and historical. To find out more, visit our guide on Brent and WTI crude oil prices.

Here are a few answers to help get you started if you’re considering trading crude oil.

The first step to trading oil CFDs is to understand how CFDs work and to find a reliable brokerUdabur Investment. Oil CFDs are complex, as well as high-risk. Traders would be wise to build a solid understanding of the CFD market, oil trading as well as technical analysis tools before considering trading oil CFDs.

According to a January 2020 report by Statista, the largest oil company by revenue in the world is Sinopec at $432bn US dollars, followed by Royal Dutch Shell at $382.97bn, Saudi Aramco in third place at $356bn, and Petro China in a close fourth at $347.76bn. You can find the share prices, along with other oil giants in the oil shares comparison table.

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.

The Organization of Petroleum Exporting Countries (OPEC) is an organization that serves as a market modulator and unifier of oil trade policies. OPEC’s main role is to regulate oil supply and prices worldwide. OPEC currently consists of the following 13 countries: Algeria, Angola, Congo, Equatorial Guinea, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

Ahmedabad Investment