Crude Oil Trading
Where Can I Open a Crude Oil Trading Account? |
There are many spread trading companies which offer thousands of international markets such as commodities, like crude oil and gold, but also indices, foreign exchange and equities.
Some firms, such as Financial Spreads, provide the usual benefits of spread trading including two way, tax free* trading with zero commissions and the option of trading outside regular market hours.
| Brent Crude Oil Futures - Spread Size |
4 |
6 |
6 |
6 |
5 |
4 |
4 |
12 |
| Brent Crude Oil Futures - Min Stake |
£1 |
$2 |
£1 |
£0.5 |
£1 |
£1 |
£1 |
£1 |
| US Crude Oil Futures - Spread Size |
4 |
6 |
6 |
6 |
5 |
4 |
4 |
12 |
| US Crude Oil Futures - Min Stake |
£1 |
$2 |
£1 |
£0.5 |
£1 |
£1 |
£1 |
£1 |
Comparison Notes.
Advantages of Crude Oil Spread Trading |
There are several advantages which spread trading holds over the typical methods of trading crude oil:
- Spread trading is tax free*. You do not take possession of any assets, you are simply speculating on the future price of a barrel of oil. This means spread traders do not pay income tax, capital gains tax or stamp duty*.
- Unlike traditional methods of trading crude oil, spread trading allows you to speculate on markets to go down as well as up. This provides added flexibility and allows you to trade in whichever direction your research suggests the oil market will move.
- Most spread trading companies do not charge broker’s fees or commissions on your trades, this can help keep trading costs down.
- Financial spread trading allows investors to trade a wide range of international markets and asset classes. You can trade both Brent Crude Oil and US Crude Oil contracts but you can also trade on gold, indices including the FTSE 100 and Dax 30, stocks and shares, foreign exchange and even bonds and interest rates from a single account.
Crude Oil Spread Trading Example |
If you decide to spread trade on a market such as Brent Crude Oil then, on visiting a spread trading company's website, at the moment you would see the Brent Crude Oil (September) futures market priced at $75.18 - $75.23.
As a result, you can speculate on Brent Crude Oil settling:
- above $75.23, or
- below $75.18
On the expiry date for this market, 12-Aug-10.
As this is a futures market you should note that you can close your trade during market hours before the expiry date, however, the position will automatically close on the expiry date if it is still open.
When spread trading, investors trade on every unit the market moves up or down; with both the Brent Crude Oil and the US Crude Oil (WTI) markets a unit is 1¢ of the commodity's price movement.
For instance, you might decide to speculate £2 for every 1¢ Brent Crude Oil rises or falls.
Note that many spread trading firms also allow you to trade in Dollars or Euros, e.g. €x per 1¢.
Spread Trading on Crude Oil to Rise |
If you bought the Brent Crude Oil (September) market at $75.23 and the commodity rose then you may decide to let your trade run to expiry. If that were to happen then the market might ultimately close on 12-Aug-10 with a price of $75.98. This would result in:
Profit or Loss = (closing price of the market - initial price of the market) x stake per 1¢
Profit or Loss = ($75.98 - $75.23) x £2 per 1¢ stake
Profit or Loss = $0.75 x £2 per 1¢
Profit or Loss = 75¢ x £2 per 1¢
Profit or Loss = £150 profit
The markets can of course fall, if the market spread was to drop to $74.52 - $74.57 before the expiry date, you could choose to close your position early to limit your losses. If so, you would sell your trade at $74.52.
Therefore, with the same £2 per 1¢ stake:
Profit or Loss = (closing price of the market - initial price of the market) x stake per 1¢
Profit or Loss = ($74.52 - $75.23) x £2 per 1¢ stake
Profit or Loss = -$0.71 x £2 per 1¢
Profit or Loss = -71¢ x £2 per 1¢
Profit or Loss = -£142 loss
Spread Trading on Crude Oil to Fall |
One major advantage of spread trading is that you can sell the markets.
When we started this example, the Brent Crude Oil (September) price was $75.18 - $75.23.
If you were to sell at $75.18 and the market fell then the spread might change to $74.45 - $74.50. Assuming this was the case, you might decide to take your profits by closing your trade at $74.50 rather than letting it run to the expiry date.
Profit or Loss = (initial price of the market - closing price of the market) x stake per 1¢
Profit or Loss = ($75.18 - $74.50) x £2 per 1¢ stake
Profit or Loss = $0.68 x £2 per 1¢
Profit or Loss = 68¢ x £2 per 1¢
Profit or Loss = £136 profit
However, if the market were to rise to $75.77 - $75.82, you may decide to close your position to prevent further losses. If this were the case, you would buy at $75.82.
You would close your trade with the same £2 per 1¢ stake:
Profit or Loss = (initial price of the market - closing price of the market) x stake per 1¢
Profit or Loss = ($75.18 - $75.82) x £2 per 1¢ stake
Profit or Loss = -$0.64 x £2 per 1¢
Profit or Loss = -64¢ x £2 per 1¢
Profit or Loss = -£128 loss
Brent Crude Oil (September) market accurate as of 09-Jul-10. Expiry date for this market: 17:00 BST, 12-Aug-10.
Where can I Find Crude Oil Spread Trading Charts? |
Many spread trading firms like Financial Spreads provide a variety of historical data and analysis, which includes candlestick charts, on nearly all of the financial markets they offer.
In particular you are able to make use of live crude oil spread trading charts that offer a variety of statistics including Moving Averages and Bollinger Bands.
You can typically alter these charts to show data over several time frames that range from hours or minutes to days or even weeks.
Example Crude Oil Chart
Crude Oil Trading Companies – Account Services Comparison |
The companies detailed below all provide crude oil spread trading markets and offer the usual benefits of spread trading such as a wide variety of markets, tax free trading*, no broker’s fees and two way trading.
| Online Application |
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| Credit Account |
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| Deposit Account |
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| Stop Loss Available |
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| Automatic Stop Loss |
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| 24 Hour Trading |
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| FSA Authorised and Regulated |
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| Candlestick Charts |
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Comparison Notes.
Crude Oil Trading and Risk Management |
You can get carried away when you start investing, particularly when thinking about the amount of money you might make. And making a profit is rarely seen as a bad thing. Still, investors have to remember that they won’t profit on every trade.
The one thing I always try to stress to anyone looking at the markets is that you can lose money. Naturally, as with all investing, be it on Stocks and Shares, pensions or buying barrels of crude oil, there is a downside and with spread trading you need to be careful because you can lose more than you initially invested.
It can be useful to think about some of the other areas which the following risk notice covers, "Spread trades carry a high level of risk. Before trading, ensure that spread trading matches your investment objectives. Familiarise yourself with the risks involved. Where necessary, seek independent advice".
Having said all that, you can put limits on your trades to help limit your losses without impacting your upside. To learn more see our feature on Stop Loss Orders.
Another option for reducing your risks is simply to trade with smaller stake sizes such as £1 per point or $1 per point. This is an all too often overlooked aspect of risk management and something any investor should bear in mind.
Financial Spreads » "With FinancialSpreads.com you get all the advantages of
Spread Trading as well as commission free CFD Trading on 2,500+ markets, 24 hour trading, professional level charts and..." read
Financial Spreads review.
|
Crude Oil Trading - 16 May 2013 |
| 16-May-13 |
[3:41pm] Oil prices are getting torn between speculation about further stimulus and a weak demand outlook after this afternoon’s disappointing US economic data.
Update by Michael Hewson, Senior Market Analyst, 
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| 16-May-13 |
[7:53am] After the close of Wall Street, WTI Crude Future (JUN 13) was about flat to $94.33.
The contract was above its 20DMA (@ $91.65) and above its 50DMA (@ $93.03).
The US Department of Energy reported that, for the week ended 10 May, crude oil inventories fell 624k barrels compared to the previous week.
Update by 
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| 16-May-13 |
[7:34am] Crude oil prices remain under pressure.
Oil futures fell for the fifth time in six days amid signs of economic weakness in the US and Europe.
US industrial production dropped the most in eight months in April and the euro-area economy contracted more than forecast impacting the demand for fuel.
During electronic trading last night, US crude (WTI) for June fell 51¢ to $93.79 per barrel.
Also see - live crude oil chart.
Update by Lee Mumford, Trader, 
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| 16-May-13 |
[6:08am] Crude oil slipped further during yesterday's early trading but managed to claw back losses following an unexpected drop in US stockpiles; 600,000 barrels were wiped off the inventory list.
As a result, the market closed relatively unchanged at $94.30.
Update by Jonathan Sudaria, Market Dealer, 
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| 16-May-13 |
[5:00am] In Asia, crude oil for June delivery is trading 0.2% or $0.18 lower at $94.12 per barrel.
Yesterday, crude oil for June delivery rose 0.1% or $0.09 to $94.30 per barrel, after the EIA reported that US crude inventories declined unexpectedly by 624,000 barrels to 394.9 million barrels for the week ended May 10.
However, crude oil prices dropped earlier in the session, as investors grew worried about energy demand prospects, following disappointing macroeconomic data from the US and the Eurozone.
Update by Ishaq Siddiqi, Market Analyst, 
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| 16-May-13 |
[5:00am] Crude Oil Price Update:
WTI Crude is trading -$0.18 (-0.19%) lower at $94.12 ($/barrel)
Brent Crude is trading -$0.37 (-0.36%) lower at $103.18 ($/barrel)
Update by
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| 16-May-13 |
[4:13am] US Crude oil closed higher on Wednesday and the high-range close sets the stage for a steady-to-higher opening when Thursday's session begins. Stochastics and the RSI are turning bearish signalling that sideways-to-lower prices are possible near-term. If it extends this month's decline, November's low crossing is the next downside target. Closes above the 20 day moving average crossing are needed to confirm that a short-term low has been posted.
Update by 
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For more see our 'latest crude oil trading reports'.
This content is for information purposes only and is not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.
Unless stated otherwise, the above time is based on when we receive the data (London time). All reasonable efforts have been made to present accurate information. The above is not meant to form an exhaustive guide. Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Crude Oil Trading' by DB, updated 16-May-13
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