While margin can magnify profits on successful trades, it can also magnify losses on trades that go against the trader. By leveraging these resources, traders can develop a well-rounded understanding of the oil market and make more informed trading decisions. Contracts for more than 1.0 billion barrels of WTI crude are traded each day in the markets, and as the US becomes an increasingly important producer and exporter of crude oil, that figure could increase. Oil is measured in units called barrels, each containing just under 159 litres of crude oil. In 2022, global oil production reached 93.90 million barrels per day, according to Statista. However, this figure remains slightly below the all-time high of 95.0 million barrels per day recorded in Crude oil cfd 2019.
Position Size
Note that leveraged products are complex, so it’s important that you understand how they work before you trade them and whether you can afford to lose your money. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. It does not take into account readers’ financial situation or investment objectives.
The United States is the largest producer of crude oil, followed by Russia, Saudi Arabia, and Canada. As of December 2023, US crude oil production averaged 13.3 million barrels per day. Crude oil markets are experiencing a period of extreme volatility, making them some of the most alluring prospects for investors around the world. Deepen your understanding of the oil market through comprehensive research, including fundamental and technical analysis.
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USOil
- Oil trading can be profitable due to the highly active market and the numerous external factors affecting oil prices, creating frequent trading opportunities.
- Please read our RDN and other legal documents and ensure you fully understand the risks before you make any trading decisions.
- The material provided here 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.
- In recent years, Brent crude oil is usually more affected by political, economic and geographical pressures and instability.
- You can use several long- and short-term strategies that align with your trading plan to place successful bets.
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Monitoring the commodity’s activity can help you to keep an eye out for any key fundamental or technical events that may affect short-term movements in its value. Commercial crude oil production dates back to the mid-19th century when Colonel Edwin Drake drilled the first commercial oil in Pennsylvania, United States. Explore other CFD markets and assets to diversify your trading portfolio and mitigate risk. Once you have decided which Oil CFD you want to trade, open a trading account with a broker who offers CFD trading. Oil CFDs offer competitive and tight spreads that decrease investors’ default and downgrading risk.
Markets
Scalping typically results in smaller trade results but the goal is to obtain a greater frequency of trades throughout the day. As a result, inexpensive trade costs, like zero commissions from Alchemy Markets, make scalping a more viable strategy with our brokerage compared to others. IG International Limited is part of the IG Group and its ultimate parent company is IG Group Holdings Plc. IG International Limited receives services from other members of the IG Group including IG Markets Limited.
Dubai crude oil – also known as Fateh crude – is produced in the United Arab Emirates. It’s ‘medium’ and ‘sour’, with higher sulphur content and greater density compared to US crude oil and Brent crude oil. Dubai crude oil is a key benchmark for pricing oil exports from the Middle East to Asia and it’s widely used to price crude oil sales in the Persian Gulf region. The oil and gas industry encompasses different types of oil, such as crude oil, no-lead gasoline, natural gas, and heating oils.
Key data points
- You should read and understand these documents before applying for any AxiTrader products or services and obtain independent professional advice as necessary.
- This will help you predict future prices and market direction that will assist you in placing ideal entry and exit orders.
- CFDs typically offer higher leverage, meaning you can control larger positions with a smaller initial investment.
Among these, crude oil remains the largest and most widely traded sector, sourced from various points of origin worldwide. Geopolitical events such as conflicts, wars, and political instability can cause disruptions in oil-producing regions, which lead to supply disruptions and, consequently, price increases. For example, tensions in the Middle East have historically had a significant impact on oil prices. Let’s use the example that Brent crude oil is priced at £50 per barrel; this means that one lot is worth £5000.
Example of CFD oil trading
When spreads are tight, there is high volume and market liquidity leading to better profits. Trading with leverage means the trader can use borrowed funds from the broker to expand their market position. Oil CFDs enable trading with leverage as the trader is only required to deposit a small fraction of the trade value to enjoy profits on the entire position. The 2000s brought increased volatility that culminated with the oil price shock in 2008, which saw WTI reach a high of $147.
The price of WTI is often compared to other crude oils, such as Brent Crude, to assess price differentials and trends in the global oil market. Another method for investing in oil with a share of asset ownership is through ETF trading. Exchange-traded funds work in a similar way to shares in the stock market, as the trader becomes a partial owner of the asset. This allows traders to invest in certain oil companies that have a promising stance within the stock market.
West Texas Intermediate (WTI), also known as USOIL, refers to oil produced in the United States, namely off the gulf of Mexico. WTI is known for its high quality, characterised by its lightness and sweetness (low density and sulphur content). It has historically been a bit cheaper than Brent due to transportation logistics. This ability to increase your buying power is a double edged sword, as the losses incurred would also be magnified if the price goes against your trade’s direction. Given that OPEC+’s meetings are scheduled in advance, oil traders are always looking forward to these meetings to anticipate the price action. Entering a CFD trade means you’re buying or selling barrels of oil with each CFD typically representing 1 barrel (159 litres, 35 imperial gallons, or 42 US gallons).
You should read and understand these documents before applying for any AxiTrader products or services and obtain independent professional advice as necessary. Environmental policies such as climate change concerns and policies aimed at reducing carbon emissions can affect the long-term outlook for oil demand and, consequently, prices. The price of WTI Crude Oil can be influenced by the interplay of several factors, including supply-side and demand-side, as well as geopolitical and economic events. It is worth noting that the size of CFD trades are measured in ‘lots’, and in this case, one lot represents 100 barrels of crude oil. Notice how on the UKOIL-USOIL Daily Chart, the price reaches extreme highs near August of 2022, indicated by the red box.
Since the 1970s, OPEC has expanded its membership and today it tries to manage the supply and production of crude on a global basis. Sometimes it does this in conjunction with non-OPEC oil-producing nations such as Russia, to try and create a stable and attractive price range in oil for its member states. OPEC has regular meetings throughout the year to establish production targets and quotas. However, with the growth in non-OPEC oil production, in the US and elsewhere, its overall influence is far more limited than in its heyday in the 1970s and 80s. Changes in the dynamics of supply and demand can also cause oil prices to experience sharp movements. Oil prices are sensitive to global economics and geopolitics, acting as barometers for both.