Introduction of Oil
Introduction of Oil
Oil is one of the most actively traded commodities in the world，it also knows as 'petroleum or crude oil' or more popularly known as 'Black Gold' in the modern world. Generally speaking, price fluctuation of crude oil is closely related to political events and the economy.
The crude oil market is significantly larger than that for any other commodity, both in terms of physical production and financial market activity. The main crude oil trading contracts in the world are West Texas Intermediate (WTI) futures, Brent Crude futures, and Dubai Crude futures.
WTI futures contracts are traded on the New York Mercantile Exchange (NYMEX), which is owned by the Chicago Mercantile Group (CME). WTI futures contracts are deliverable in Cushing, Oklahoma. Cushing is a transshipment point with intersecting pipelines and storage facilities with easy access to refiners and suppliers.
Brent Crude futures contracts are traded on the Intercontinental Exchange (ICE) in London.
Dubai Crude is a medium sour crude oil extracted from Dubai. Dubai Crude futures contracts Singapore Exchange. Other types of petroleum futures include heating oil, fuel oil, gasoline, light diesel, etc. Many factors affect crude oil prices, such as crude oil supply and demand, political factors, the dollar index, and other energy trends.
There are three main ways of speculating on oil price movement: futures and options, CFD trading, or investing via equities and ETFs.
Buy futures and options
To trade futures and options, investors need to use the right exchange for the oil benchmark you wish to trade. Most exchanges have criteria for who is allowed trade on them, so professionals undertake the majority of futures speculation instead of individuals. If you want to trade options, you’ll need an options broker.
Trade via CFDs
CFDs enable investors to trade on the changing prices of futures and options without buying and selling the contracts themselves. And instead of trading on a commodities exchange, investors create an account with a leveraged provider.
Instead of trading individual markets, you can get exposure to oil via the shares of oil companies and oil exchange-traded funds (ETFs). The prices of oil companies are heavily influenced by the price of oil, and can sometimes offer good value compared to trading oil itself. Investors can use ETFs to invest in oil benchmarks or a basket of oil stocks.