Reviewed by Nick Cawley on December 20, 2021
Crude Oil Trading Strategies and Tips
- Crude oil[1] is ranked among the most liquid commodities in the world, meaning high volumes and clear charts for oil[2] trading.
- Oil[3] traders should understand how supply and demand affects the price of oil.
- Both fundamental and technical analysis[4] is useful for oil trading and allows traders to gain an edge over the market.
- Traders should follow a risk conscious crude oil trading strategy for greater consistency and efficiency.
WHY TRADE CRUDE OIL AND HOW DOES CRUDE OIL TRADING WORK?
Crude oil[5] is the world economy’s primary energy source, making it a very popular commodity to trade. A naturally occurring fossil fuel, it can be refined into various products like gasoline (petrol), diesel, lubricants, wax and other petrochemicals. It is highly demanded, traded in volume, and extremely liquid. Oil trading therefore involves tight spreads[6], frequent chart patterns, and high volatility.
Brent crude is the world’s benchmark for oil with almost two thirds of oil contracts traded being Brent oil. WTI is America’s benchmark oil, it is a slightly sweeter and lighter oil compared to Brent.
CRUDE OIL TRADING HOURS
WTI trades on CME Globex:
Sunday - Friday, 6:00 p.m. - 5:00 p.m. (with an hour break from 5:00 p.m. to 6:00 p.m. each day)
Brent trades on ICE:
Sunday - Friday - 7:00 p.m. - 5:00 p.m.
CRUDE OIL TRADING BASICS: UNDERSTANDING WHAT AFFECTS PRICE MOVEMENTS
When trading oil, the two major focal points are, as with many commodities, supply and demand[7]. Whether there was an economic report like a news event or press release or tensions in the Middle East, the two factors that
