Oil is the most heavily traded commodity on the market. It’s bought and sold by speculators, funds and investors, as well as oil producers and refiners who want to hedge their exposure.
What is oil trading?
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. This volatility makes it extremely popular among traders.
You can use CFDs to trade on oil’s spot price, or the prices of oil futures or options contracts, without having to own any actual oil.
How do oil markets work?
Oil markets work using futures contracts, which enable investors, speculators and businesses to buy and sell barrels of oil for set prices on a set date in the future. Hundreds of millions of futures contracts are traded every day, for benchmark oils such as WTI and Brent, as well as lesser-known crudes.
At the end of the day, a settlement price of the benchmark oils would be announced, which would then be used to calculate the price of other oil contracts.
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