Trading on the Crude Oil Markets
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Trading on the Crude Oil Markets

Trading on the Crude Oil Markets

With the risk of a double dip recession and therefore lower demand for energy products, crude oil prices have been rather deflated of late.

Looking at the crude oil price charts one can see that even the long-term moving averages have now turned negative. Note that the long-term bull trend lines have also been broken. That does not augur well for technical traders.

Whether you are a technical trader or not, you should be aware of the weekly oil inventory figures. These come out every Wednesday and can cause some interesting spikes. At the moment, crude oil inventories are looking strong and that is not helping the price. US Crude Oil is already down around the levels we were at all the way back in September 2009.

According to Simon Denham of Capital Spreads, Oil is one of those rather curious products. It is very expensive to store and so small surpluses can lead to dramatic price falls. At the same time, a tiny shortfall in inventory levels creates an equally dramatic price rise.

If you are looking to trade the oil markets then note that all good investment news websites and blogs will tell you that when you speculate on the financial markets there are some risks regardless of which form of investment you use. Whether you choose share trading, ETFs or CFDs you can lose money on your investment.

So where should you look if you want a fast, flexible way of investing which also offers risk management tools, tax benefits* and access to thousands of global markets such as Brent Crude Oil and US Crude Oil? For many private investors spread trading is a solution.

As just mentioned, you should always consider the risks, all forms of speculation have a negative side. With spread trading you can lose more than you initially staked.

There are a couple of other pointers which the following warning says you should consider, "Spread trades do carry a high level of risk to your capital. Before investing, ensure that spread trading matches your investment objectives. Make sure you familiarise yourself with the risks involved. Seek independent advice where necessary".

Having noted this though, given the broad variety of markets that are available, spread trading is an investment instrument worth thinking about. Most spread trading firms offer thousands of international markets which range from indices, shares and currencies to commodities such as wheat and copper. Naturally you can also spread trade on crude oil.

Also financial spread trading is tax free*. There is no actual exchange of any stocks or shares; instead you are purely speculating on the future value of a market.

Finally, be aware that you can buy and sell when spread trading, ie you can speculate on markets to move higher or lower. If oil is trending down you can speculate on that. If the market turns, then you can also change your position and speculate on the market to go up.

* According to current UK and Irish tax law. Tax laws can change.



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.


Risk Warning: CFD trading and spread trading carry a high level of risk to your capital and you may lose more than your initial investment. CFD trading and spread 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.

'Trading on the Crude Oil Markets' by DB, updated 13-Aug-10

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Risk Warning: CFD trading and spread trading carry a high level of risk to your capital and you may lose more than your initial investment. CFD trading and spread 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.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

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.


* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.

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