How to Trade Crude Oil
The Crude Oil market is a mature and deep market, with excellent trading liquidity offering traders the opportunity to trade on both the long and short sides, meaning that there are always trading opportunities irrespective of price movement.
Due to global demand and the enormous amount of vital applications that Crude Oil has in the world, it is considered an extremely sensitive and volatile commodity that can jump dramatically in response to heightened political and economic circumstances. This volatility is exacerbated by the fact that much of the world’s Crude Oil emanates from countries located in politically unstable regions.
West Texas Intermediate (WTI) crude oil is the underlying commodity for oil futures on the New York Mercantile Exchange. It is a blend of several types of U.S. light sweet crude oils. WTI is produced in various areas of the United States and refined in the Midwest and along the Gulf Coast. It is lighter and sweeter than Brent crude, The other major global benchmark and therefore usually trades at a premium versus Brent, but not always.
Brent Crude Oil is the trading classification for sweet light crude oil, which made up of a variety of crude blends drawn from the North Sea. It is the leading global price standard in Oil, and is used to price roughly 65% of the global crude oil market. Most oil production that emanates from Europe, Africa and the Middle East and flows westwards is priced in relation to Brent Crude.
NSFX Ltd. offers Crude Oil trading to all clients. Since 2005, Crude Oil has been traded on the electronic Intercontinental Exchange, known as ICE. One contract is equal to 100 barrels and is quoted in USD. In the world of Forex, Crude oil is traded as a CFD using the same quantities relative to ‘barrels’ with USD as a base currency (1 Lot = 100 Barrels).
Brent crude (UKOIL) and WTI crude (USOIL) are the most popular benchmarks in Oil trading. Globally all oil is priced and traded in U.S. Dollar value.
Note: Visit our dedicated page for real life foreign exchange trading examples.
Why trade with NSFX?
NSFX Ltd. recognises that trading Crude Oil is an integral part of many traders’ trading strategy. Consequently, NSFX provides clients with the best possible trading conditions to profit from Crude Oil price movements, including:
- Fast execution and the tightest spreads
- Multiple platform trading capabilities (Web, desktop, mobile)
- Balanced leverage and exposure, 1:100, 1% of transaction value
- Trading flexibility – fixed spread or variable ECN spread
Trading Crude Oil at NSFX
The following table outlines Crude Oil trading parameters at NSFX.
|Instrument||Spread||*ECN Spread||Leverage||Contract Size||Min. Trade||ECN Min. Trade||Roll Sell||Roll Buy|
|UKOIL||6||5||1:100||100||0.1 Lots||0.1 Lots||0.9185||-5.604|
|USOIL||6||5||1:100||100||0.1 Lots||0.1 Lots||0.89225||-5.604|
* These are averages of fluctuating spreads
Crude Oil Rollover – Additional Information
At NSFX, rollovers are only dealt with on a ‘spot’ basis. This means that all positions are settled two business days from inception, as per market rules.