These days trading is one of the easiest ways to earn money. There are many types of online trading, such as gold, forex, commodity, and many more. And one of the popular ones is Oil Trading!
Today in the financial market, oil trading has become the most widely-traded commodity in the world. Oil trading involves buying and selling different assets by speculators, funds, and investors. The oil producers and refiners prefer oil trading to hedge their exposure.
There are several ways to trade oil, one of which is oil CFDs. This simply means you’re not buying any assets or a physical barrel of oil but just speculating the oil price will rise or fall in the open market based on the oil price forecast.
Crude oil is the most broadly traded commodity now. It is considered a valuable source as it is used for manufacturing many different things, including plastics, cosmetics, petroleum, and more.
Do you want to invest in oil trading but don’t know how it exactly works? No worries, you’ve landed on the right page!
Today in this blog, we’ve explained what oil trading is and how the oil market works. So keep reading till the end to get all the information about trading crude oil.
What is Oil Trading?
Oil trading refers to the process of buying and selling different types of oil and oil-linked assets. The goal of trading oil is to achieve gain based on the most frequently traded commodities around the globe.
Oil is a natural but finite resource; that’s why every day its price can rise or fall every day. These fluctuations mostly depend on the supply and demand changes. Due to this extreme volatility; oil has become an extremely popular trading source among investors and traders.
Types of Crude Oil
Nowadays, various types of crude oil have traded on the global market. The two major types of crude oil that are commonly used are:
- Brent Crude Oil
- West Texas Intermediate (WTI).
How Does Oil Trading Work?
Crude oil is always in demand because it is the world’s major energy source. This oil can easily be refined into everyday products like diesel, gasoline, and other petrochemicals. All these products are always in high demand, and they can be traded in large volumes. That’s why crude oil prices are continuously changing; that’s why it’s important to stay updated with the oil price forecast.
As per the data of macrotrends, on June 30, 2022, the current price of WTI crude oil was $109.78 per barrel.
Here’s the annual data of the crude oil prices for the last ten years:
||Average Closing Price
Crude oil can be traded through products based on long-term and short-term investments. Here are some ways to trade oil:
- Crude oil spread betting
- Oil CFDs
- Crude oil futures
- Oil ETFs
Now you know what oil trading is and how it works. If you’re interested in trading oil, first understand the oil market and develop a plan and strategy. Stay updated with the oil price forecast to attain maximum gains.