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Online Crude Oil Trading

When it comes to online investment trading, it is believed that the more unique and high-risk the investment is, the more profit you can reap. That is why some people like to invest in a product that is limited in amount and eventually runs out; products like crude oil, for example.

As we all know, the emerging trend these days is to look for a different source of energy as an alternative to oil. Even though this might denote struggling for a healthier and greener choice of energy, there is another perspective to be had that the remaining amount of crude oil in this world is getting even more limited. Therefore, based on the law of supply and demand, there is a good chance that oil prices will soar in the future.

It stands to reason that crude oil trading will be the next best choice when it comes to diversifying your trading portfolio. Especially right now that the demand for this limited energy source is on the rise.

Getting involved in crude oil trading does not mean that you will actually buy barrels and barrels of that fossil liquid and get it delivered in your doorstep. Although that is always a viable option, you certainly do not want to deal with the storage and maintenance of this precious energy supply.

As a matter of fact, crude oil trading can be done online through some prominent and respected oil trading Forex brokers. Just like other trading investment products, you simply need to create an account, deposit some money, and start trading oil right away.

However, before you rush into it without the knowhow, let’s understand online crude oil trading better and learn how to do it properly.

What is Crude Oil Trading?

Making a substantial investment decision starts by truly understanding the product of your investment. In this case, the crude oil itself.

Crude oil is a natural resource extracted from Mother Nature via drilling deep down into its core using gigantic drilling machines. This oil is gathered together with other natural resources like natural gas and saline water. It is then processed and refined into an extensive variety of products, including petroleum and plastics.

The amount of crude oil is extremely limited in this world because this particular oil is actually a type of ancient creation that dates back millions of years. Crude oil is formed when the remains of prehistoric algae and plankton fell into the very bottom of the ocean, merging with the mud underneath, seeping through layers and layers of sediment, then heated for millions of years until they turn into liquid. And so, crude oil is considered a nonrenewable source of energy, for it needs millions of years to be created when the supply runs out.

Crude oil is drilled and extracted from numerous places in the world. However, there are currently two primary benchmarks that you need to pay attention to if you want to invest in it.

1. North Sea Brent Crude

Brent crude is the primary benchmark of crude oil around Europe, Africa, and the Middle East. It originally refers to the oil extracted from 15 different fields in the North Sea. Nowadays, however, there are four widely recognized oil fields namely Brent, Forties, Oseberg, and Ekofisk.

Brent crude oil is heavier with high gravity and a lot of impurities. That is why it takes more time and effort to process and refine this crude into usable oil like gasoline and diesel fuel, resulting in a higher price than say the US crude oil. Still, Brent crude is considered as one of the crucial benchmarks of crude oil trading because around 66% of all oil contracts in the world use Brent crude as their price reference. And since this crude oil is produced close to the sea, the cost of international transport is considerably lower.

Brent crude oil is mainly traded on the Intercontinental Exchange (ICE).

2. West Texas Intermediate (WTI)

The West Texas Intermediate crude oil refers to a blend of oil extracted from oil wells around the United States and delivered to Cushing and Oklahoma via pipeline. This type of crude oil is considered as high-quality due to its “lighter” and “sweeter” characteristics. Compared to Brent crude, it takes more effort to process and refine this oil into usable oil material.

On the other hand, since the WTI crude oil is produced in oil wells that are mainly located on land, the distribution process can be a challenge, and therefore, require much higher transportation costs. That is one of the main reasons why despite the higher quality of WTI crude oil, it is mainly used in the local US markets. The high costs of distributing the WTI crude oil overseas makes it almost impossible for the WTI to compete with the Brent crude oil pricing. Hence, Brent crude is much favored by international markets.
The WTI crude oil is mostly traded in the New York Mercantile Exchange (NYMEX).

Brent and WTI crude oil are the most crucial benchmarks that you need to know about because the price of these two oils often moves in entirely different directions. This brings us to the term “Brent-WTI spread” in online crude oil trading, which means the price difference between Brent and WTI crude oil.

Crude oil is also commonly known as the black gold of the investment business, although the color of this product is not always necessarily black. You can trade crude oil using the old-fashioned way of actually buying and selling the product, but it will be such a bother since this product needs special storage and extremely high maintenance.

Therefore, you can choose to trade oil online via various oil trading brokers using Spot Contracts and Future Contracts. However, as this type of oil trading can be considered expensive with its high margin requirement, retail traders with limited source of funding can benefit from online crude oil trading in forms of contract-for-difference or commonly known as CFD, where they can profit from oil pricing differences.

Best Online Crude Oil Trading Forex Brokers

Here are the list of best oil trading Forex brokers:
XM Malaysia
XM Malaysia
XM offers various online futures crude oil trading CFDs with spreads as low as 0.05 pips, and a margin percentage of 1.5%. Brent crude oil at XM is available with a minimum trade size of 100 barrels. Also, the US WTI oil is offered in standard WTI oil account with the same minimum trade size of 100 barrel, and WTI oil mini account with a minimum trade size of 10 barrels.

XM was founded by Trading Point Holdings Ltd. in 2009 and has since known to be the world’s most respected Forex broker, serving over 2 million clients from 196 countries. The brokerage company prides to be the safest broker in the market with its multiple licenses from major regulatory bodies, such as FCA of the UK, ASIC of Australia, IFSC of Belize, and CySEC of Cyprus. The company now offers a wide range of products, including 55 currency pairs and CFDs on precious metals, energies, equity indices, cryptocurrencies, and individual stocks.

FBS Malaysia
FBS Malaysia
Trading crude oil online with FBS is available in a form of CFD trading in UK Brent and US WTI oils using only FBS Standard, Cent, Micro, and Zero Spread accounts. The typical spreads offered for crude oil trading is 2 pips for all trading accounts, whereas the available leverage depends on the trading account you are using. With FBS Standard, Micro, and Zero Spread accounts, the maximum leverage presented is 1:3000. As for FBS Cent account only offers maximum leverage as high as 1:1000. On top of everything, FBS also charges their clients of a commission fee of 15 USD for Cent account, and 25 USD for Standard, Micro, and Zero Spread accounts.

If you get excited about bonuses and promotions, then FBS will satisfy your needs with tons and tons of promotional events. Founded in 2009, the brokerage company is licensed and regulated by the IFSC of Belize and CySEC of Cyprus and has dedicated itself to serving the clients with various exciting programs, including free seminars and special events.

HotForex Malaysia
HotForex Malaysia
Online crude oil trading at HotForex is offered in Spot and Futures Contracts that you can choose based on your trading objectives and capacity.

HotForex offers online crude oil trading in spot contracts in UK Brent and US WTI oil with a minimum spread of 0.05 pips in addition to negative balance protection. Leverage for crude oil spot trading at HotForex is offered at a maximum of 1:66 with a minimum contract size of 100 barrels.

In addition to crude oil spot trading, HotForex also offers online crude oil trading in Futures contract in UK Brent and US WTI oil with a minimum spread of 0.03 pips and the smallest contract size of 100 barrels. Moreover, the leverage offered for crude oil futures trading at HotForex is up to 1:100.

HotForex was founded in 2010 by the HF Market Group, one of the most distinguished global leaders in the trading industry, and has managed to obtain licenses and regulations from seven different major regulatory agencies, namely the IBC of St. Vincent & the Grenadine, DFSA of Dubai, FCA of the UK, CySEC of Cyprus, FSC of Mauritius, FSCA of South Africa, and FSA of Seychelles.

FXTM Malaysia
ForexTime Malaysia
Online trading in crude oil CFDs at FXTM is available in the UK Brent oil and US crude oil spot trading with a minimum size of 100 lots.

UK Brent oil spot trading is offered in an average spread of 5 pips using FXTM ECN and FXTM ECN MT5 accounts. The FXTM Standard account comes with a higher average spread of 9 pips and FXTM Zero MT4 with the highest average spread of 10 pips. The maximum leverage available for trading the UK Brent oil is 1:52.

As for the US WTI crude oil spot, you will be able to benefit from an average spread of 4 pips using FXTM ECN and FXTM ECN MT5 accounts. FXTM Standard and FXTM Zero MT4 offer slightly higher average spreads of 9 and 10 pips, respectively. You will also benefit from the maximum leverage of 1:49 by trading US WTI crude oil at FXTM.

FXTM is a leading brokerage company, licensed and regulated by multiple regulatory institutions, such as the CySEC of Cyprus, FCA of the UK, and IFSC of Belize. This company has been in the business since 2011 and has managed to offer various trading instruments including 60 currency pairs, CFDs, spot metals and indices, and over 180 share CFDs.

Benefits of Online Crude Oil Trading

Although online crude oil trading is not as widely popular as Forex or metal trading, you can gain a whole different level of benefits if you decide to work with this exciting and one-of-a-kind trading instrument.

1. High Liquidity in International Market

As previously mentioned, crude oil is processed and refined into a wide variety of products, ranging from petroleum to plastics. Thus, the number of people and companies demanding the products is almost limitless which brings about an extremely fast-moving market.

A fast-moving market or high liquidity is, of course, one of the most important aspects when you are looking for online trading instruments. You need to be able to quickly buy and sell the trading instrument whenever you want and at whatever price you aim.

2. High Price Fluctuations

The price of crude oil is determined by numerous factors, including supply-demand, as well as political and economic situations of the related countries. Therefore, predicting crude oil prices always provides a challenge for financial experts because it can dramatically rise and fall at the slightest events. These experts will have to use various tools and methods to predict a price that is at least close to the possible future pricing of crude oil. This high fluctuation in pricing makes crude oil trading highly volatile.

Trading in a highly volatile market may seem unreasonable; however, if you are an experienced trader, you’d know that markets with high volatility offer a massive amount of possible returns both for short and long term investments.

That being said, still the high risks of trading in such a market, even in the face of huge returns, should not be overlooked. So tread lightly and proceed only if you trust your trading skills and experience.

3. Hedge against Currency Depreciation

Crude oil is mainly quoted in US dollars. As a result, it is almost certain that the price of crude oil moves in the opposite direction of the USD, and therefore affects other related currencies quoted in the US Dollar.

That is why if you are looking for other alternative investment that works as a hedge against currency depreciation, you can always count on online crude oil trading.

4. Diversifying Trading Portfolio

It is common knowledge for businessmen that you cannot put all your eggs in one basket. Diversifying your trading portfolio is extremely important to gain all possible revenues and avoid risking all your capital when the market is moving against you.

If you feel like you have mastered Forex and metal trading market, then maybe it is the right time for you to up your game and join the crude oil trading market.

The Importance of Crude Oil Trading

You might have seen it on the news about how oil has been one of the many vital aspects of the world’s economy. This liquid seems to be quite important for some countries in terms of their political and economic decisions. That is because crude oil has an underlying value that determines the price of international goods, especially when its final products range from shipping fuel to plastics.

The United States Energy Information Administration once stated that the price of crude oil affects 96% of the cost of transportation. Therefore, when shipping cost increases, it means that the end price of other products, including food and industrial products, will do too. Furthermore, crude oil price also has a significant impact on residential and commercial use (21%), and electric power use (3%) as well. These numbers highlight the importance of this liquid in our daily lives, and you can imagine the kind of liquidity this market offers you when you start trading crude oil online.

Besides, unlike the high stability of the metal trading market, crude oil trading offers high volatility because of its uniqueness and certain power in the world’s economy and political system. Therefore, investing your fund in the online crude oil trading market will ensure a considerable amount of returns in both short and long terms, provided that you are willing to learn about the way market works and understand its underlying aspects so you can avoid the possible pitfalls in your investment.

It may sound complicated and highly risky right now but with the right strategy and timing, trading in this highly volatile market will get you the profits you have wished for.