How to trade crude oil via CFDs

Crude oil holds the distinction of being the world's foremost commodity due to its critical role in producing liquid fuels essential for transportation across water, land, and air. Additionally, oil serves as a key ingredient in manufacturing synthetic materials, asphalt, and various other essential goods. Its primary significance lies in energy production, currently accounting for approximately one-third of the global energy supply. This pivotal role makes crude oil the most traded commodity globally, offering substantial market liquidity and significant investing opportunities.

Oil CFDs allow you to trade on the price difference of oil from when you open to close the contract. This means you can speculate on both upward and downward movements in oil prices without owning the asset itself.

CFDs are leveraged products, providing exposure to the full value of the oil market with a deposit known as margin. For example, with leverage, you could open a $1000 position by depositing just $100, representing a 10% margin. This amplifies both potential profits and losses based on market movements.

Benefits of trading crude oil via CFDs

One effective way to gain exposure to oil is through trading Contracts for Differences (CFDs) on instruments like OIL or OIL.WTI. CFDs are highly intriguing financial instruments with unique characteristics that set them apart, including:
●CFDs are derivative products where you speculate on whether the price of an asset will rise or fall, without owning the underlying asset itself.
●CFDs are leveraged, allowing you to trade with a fraction of the total value of the asset, which increases both potential profits and potential losses.
●With CFDs, you can profit from both rising (BUY) and falling (SELL) prices of assets.
The ability to take long (BUY) or short (SELL) positions combined with leverage makes CFDs flexible and popular in financial markets.
●CFDs enable trading in smaller increments, allowing you to adjust the size of your investment to fit your available capital.

Steps to trade crude oil via CFDs

1. Open a trading account
Once you have decided which Oil CFD you want to trade, open a trading account with a broker who offers CFD trading. Markets.com allows you to trade crude oil CFDs effectively.

2. Place an order
Place CFD trades with predefined stop-loss orders to effectively manage market risk. Implement a variety of both short-term and long-term strategies that are consistent with your trading plan to ensure potential successful outcomes.

3. Stay updated with the global news
It is essential for you to stay informed about all global news that could impact the oil market and its prices. This awareness will enable you to forecast future prices and market trends, allowing you to make well-informed decisions when placing entry and exit orders.

4. Monitor the trade and exit when required
You can keep track of your positions and make exit decisions when the market is profitable. After opening your position with our CFD trading account, you can customize signals and alerts to monitor it effectively. Our platform, recognized for its excellence,1 provides real-time updates on running profits and overall gains from your active positions.

Crude oil prices fluctuation

Crude oil prices are influenced by their source and current market dynamics, fluctuating with supply and demand. CFDs for oil are widely favored for speculating on its price fluctuations. Unlike purchasing crude oil directly at current rates, these derivative products let you capitalize on price shifts without ownership. Through CFDs, you trade on the difference in value from when you open to close a position. Given oil's market volatility in recent years, this can result in either gains or losses. Oil market prices are intricately influenced by fluctuations in supply and demand dynamics, alongside key macroeconomic trends.

Here are several factors that significantly impact oil prices:

Controlling global oil supply: A small group of countries collectively produce half of the world's oil, granting them significant influence over global supply levels. This centralized control allows these nations to potentially manipulate oil prices.

Driving global oil demand through economic growth: Robust economic growth globally spurs demand for oil, especially in sectors like transportation and manufacturing. Conversely, economic downturns reduce demand, leading to lower oil prices.

Geopolitical factors: Conflict or instability in oil-producing regions disrupts supply, causing volatility in oil prices. Geopolitical tensions can therefore have a direct impact on oil market dynamics and prices.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.