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Spotlight on Crude Oil CFDs

Market Analysis - Milan Cutkovic | 21 May 2019

In this article, we will look at Oil derivatives – one of the most popular trading instruments both for short-term and long-term traders. Further, we will explain which products we offer and some of their key specifications.

CRUDE OIL

Crude oil is one of the most crucial resources in the modern economy. There are four main types: very light oils (jet fuel, gasoline, kerosene), light oils (fuel oils), medium oils and heavy fuel oils. The top three oil producing countries are Russia, Saudi Arabia and the United States.

WHO IS TRADING IT?

Crude oil and derivates contracts based on the underlying energy asset are widely traded, and market participants include major trading houses, oil companies, financial institutions and speculators. While energy companies might be primarily interested in hedging their exposure in the physical market, some speculators might purely speculate on the price swings using derivates.

WHAT IS MOVING THE OIL PRICE?

Aside from the obvious answer – supply and demand – oil prices can be heavily influenced by political developments. For example, unrests in a major oil producing country or geopolitical tensions in the Middle East would most likely have an impact on Oil prices. Furthermore, expectations about the economy can also influence market sentiment in the Oil market. An example of this would be the concerns about a possible trade war between the US and China. Such an event would significantly hit the Chinese economy (amongst others) and demand for Oil would therefore decrease accordingly.

OPEC

The OPEC is an organization of 14 oil producing nations, who account for roughly 44 percent of the global oil production. This gives them significant power, and they can force prices into a certain direction – such as pushing Oil prices higher by decreasing their output.

BENCHMARKS

A benchmark crude is used as reference price for market participants in the crude oil market. West Texas Intermediate (WTI) and Brent are the two most popular ones and widely used. WTI is primarily used in the US, while Brent is a common benchmark in Europe.

TRADING OIL CFDs AT AXITRADER

AxiTrader offers two different products:

  • Oil Cash CFDs – tighter spreads than on the Futures CFDs, which could benefit short-term traders who do not mind the swap charges
  • Oil Futures CFDs – higher spreads than on the Cash CFD products, but no swap charges, which is useful for traders who intend to hold their positions open for a longer period

AxiTrader allows you to trade Oil CFDs. Open an account here.

FINDING OIL CFDs IN YOUR MT4

You may add the Oil symbols in your MetaTrader 4 by holding “Control” (CTRL) and the letter “U” on your keyboard at the same time. This shortcut will lead you to the Symbols menu.

The Oil Futures CFDs are located under “Commodity Futures”:

Futures
Futures

The Cash CFD products can be found in the appropriate category:

Cash CFDs
Cash CFDs

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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