Learn About Crude Oil Futures Contracts

These increments are called “ticks.” A tick is the smallest price movement a futures contract can Stock Trading Courses make. When you buy or sell a futures contract, you measure your profit or loss by counting ticks.

What hours do oil futures trade?

Trading Hours: Futures & OptionsProduct NamePre-Open CME Globex (Sunday)Crude Oil (NYMEX)Light Sweet Crude Oil (WTI) Futures17:00 ET (16:00 CT)Light Sweet Crude Oil (WTI) Options17:00 ET (16:00 CT)Crude Oil Financial Futures17:00 ET (16:00 CT)3 more rows

A crack spread is the spread created in commodity markets by purchasing oil futures and offsetting the position by selling gasoline and heating oil futures. Oil companies and sector funds offer diverse industry exposure, with production, exploration, and oil service operations presenting different trends and opportunities. While the majority of companies track general crude oil trends, they can diverge sharply for long periods. These counter-swings often occur when equity markets are trending sharply, with rallies or selloffs triggering cross-market correlation that promotes lockstep behavior between diverse sectors. Professional traders and hedgers dominate the energy futures markets, with industry players taking positions to offset physical exposure while hedge funds speculate on long- and short-term direction. Retail traders and investors exert less influence here than in more emotional markets, like precious metals or high beta growth stocks.

Oil Shares: Trading Oil Company Stocks

Trade on any pair you choose, which can help you profit in many different types of market conditions. Learning how to trade futures could be a profit center for traders and speculators, as well as a way to hedge your portfolio or minimize losses. Like any speculative market, it’s not right for everyone, especially the risk-adverse. But, for those who seek a fast-moving trading opportunity, futures trading may be right for you. This could be why there’s a steeper fall in the May futures contract compared to the June contract. Spot prices are “particularly weak” at the moment, Hynes said, due to a combination of a “collapse in demand and a subsequent lack of storage.”

trade oil future

You’re ready to move on to live trading once you’ve tested your plan in the demo account. Oil futures can be extremely volatile, so they’re the perfect vehicle trade oil future for day and high volume traders. You can even trade micro-sized futures contracts for a $50 margin, while E-mini contracts require $500 for margin.

Oil Trading Tips

Oil spot prices represent the cost of buying or selling oil immediately, or ‘on the spot’ – instead of at a set date in the future. While futures prices reflect how much the markets believe oil will be worth when the future expires, spot prices show how much it is worth right now. Oil trading is the buying and selling of different types of oil and oil-linked assets with the aim of making a profit. As oil is a finite resource, its price can see massive fluctuations due to supply and demand changes. Discover how to trade oil with our step-by-step guide – including what spot prices and oil futures are, what moves the price of oil and the ways you can trade with us. On an exchange, the CL price fluctuates in $0.01 increments and the E-mini contracts fluctuate in $0.025 increments.

The broker can trade the 3 standard CL, QM and BZ crude oil futures. EST on Friday (with a 1-hour break from 4 p.m. to 5 p.m. each weekday). Geopolitical events in the Middle East, North Sea, Russia, Canada, Nigeria and Angola generally impact the oil market. Political or economic sanctions imposed on oil-exporting countries such as Iran, Venezuela, Qatar or Russia can result in fluctuations in global oil prices, along with the prices of other commodities. Crude oil options are the most widely traded energy derivative in the New York Mercantile Exchange , one of the largest derivative product markets in the world. A crude oil CFD order can be for as little as 25 barrels compared to 1,000 barrels for a standard futures contract. There is usually a correlation between crude oil prices and oil company stock prices.

Markets & Finance

When the demand for oil fails but production continues, there will be a surplus of oil, which is diverted into storage facilities. As these tanks fill up, concerns about surplus oil will impact market prices. However, if the economy is in a period of recession, demand for oil will fall and lead to lower oil prices if production continues. An oil option is similar to a futures contract but there’s no obligation to trade if you don’t want to. They give you the right to buy or sell an amount of oil at a set price on a set expiry date, but you wouldn’t be obliged to exercise your option.

And disasters as varied as pandemics and oil spills can make stocks plunge. trade oil future The best time of day to trade oil is when the markets are most active.

Best For Simulated Trading Strategies: Ninjatrader

Several types of crude oil can be traded, and each has its own contract. Two of the most commonly traded crude oil contracts are theCrude Oil Futures Contract , which represents 1,000 barrels of oil, and the E-mini Crude Oil Futures Contract , which represents 500 barrels of oil. The reason prices move so swiftly is that traders who have short positions in the market tend to cover their shorts quickly if price creeps up, either eroding their gains or causing losses. This wave of buying is done at the same time speculators are jumping on board to establish or add to long positions. The shorts will cover quickly because the risk is just too great.

The two most popular types are Brent Crude and West Texas Intermediate , which are traded on the Intercontinental Exchange and trade oil future New York Mercantile Exchange respectively. They are used as benchmarks for global oil prices, as well as economic health.

More On Futures

These periods can occur quite regularly as oil is such a popular and volatile market. There is usually a lot of activity when the underlying exchanges first open, and in the last half an hour or so before they close. You can trade a variety of oil markets with including popular crude oils WTI and Brent Crude, as well as no lead gasoline and heating oil.

The tiered schedule lowers commissions as your trade volume increases, while the fixed schedule charges a mere $0.85 per U.S. futures and futures options contracts plus exchange and regulatory fees. TD Ameritrade also provides a web-based platform and a mobile option for Android and iOS devices.

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