Oil trading platforms let you buy and sell WTI crude and Brent Oil through derivatives products such as futures, options, CFDs and financial spread betting. We have compared and reviewed some of the best platforms for trading oil so you can access the right account type, get the cheapest prices per trade, and utilise the best trading tools and resources.
Compare Oil Trading Platforms
Best Oil Trading Platforms
In our analysis of the best oil trading platforms we look at which broker is best for each of the below types of oil trading, plus explain more about each type of product.
Best oil futures trading platform
Saxo Markets is our pick as the best oil futures trading platform as they offer direct market access to the major oil exchange, have robust technology and discounted commissions for high volume traders.
Oil is one of the worlds most actively traded commodities, global demand for oil is expected to reach 100 Million Barrels Per Day, or BPD by 2020, up by around +5 million BPD since 2015. That’s despite the increasing use of renewable sources of energy such as solar and wind.
Oil prices can fluctuate significantly, and both producers and consumers of oil wish to protect themselves from large price movements, to fix their costs and plan ahead.
One way for them to achieve this is through the futures markets.
Futures contracts are derivatives that allow traders, producers and end-users to speculate on the future price of a commodity, in this instance, the future price of crude oil.
Futures prices reflect market expectations for the price of oil at a given point in the future.
Oil futures trade on a monthly basis out to or five or even ten years ahead, although in practice there is little if any trade more than two years out.
Oil futures prices vary month to month, and the variation in those prices creates what is known as a futures price curve. There are also many varieties or grades of crude oil. The two most widely traded as futures contracts, are WTI or West Texas Intermediate Crude and Brent Crude.
WTI is a US-centric contract while Brent is associated with Europe and the Middle East.
Oil futures contracts are usually deliverable, and each contract represents 1,000 barrels of oil. Each notional barrel would contain just under 159 litres of oil. So one oil futures contract controls almost 159,000 litres of crude.
Best Oil CFD trading platforms
City Index gets our vote for the best oil CFD trading platform, as they offer free trading signals from multiple providers, post-trade analytics and lots of news and analysis.
Taking and making delivery of physical oil is all well and good for large producers and consumers, perhaps an oil major and a chemical company say. However, for a large number of market participants, that’s not a practical proposition or one they need to be involved in.
After all, if your only interest is the rise and fall in the price of oil, then you will have little use for the end product or means to store it. That distinction was not lost on the oil futures markets, and they introduced the possibility of cash settlement rather than physical delivery.
The definition of a CFD or Contract for Differences is a contract between two counterparties that is settled in cash at the end of the contract lifetime and not the underlying instrument the contract is over.
Cash settled or not, an oil futures contract value is around US$60,000 (at the time of writing), and it has a finite lifespan.
Whereas an OTC or “Over The Counter” CFD, traded with a dedicated CFD broker, offers much more flexibility in terms of contract size and duration. For example, contract sizes of just 100 barrels, that do not expire and that can be held for as long or short a time as the trader requires.
When a CFD contract is closed, the trader either pays or receives a cash sum based on the realised profit and loss of their trade. If they have lost money, they are debited and pay that loss away, if they have made money then they receive a credit for that P&L.
Note though that both oil futures and oil CFDs are traded on a margin or geared basis that magnifies both profits and losses there are also financing charges or rollover costs to consider if you hold open positions in oil CFDs for longer than a business day.
Best oil spread betting platform
IG is the biggest and best spread betting platform to offer oil trading.
It’s also possible to bet on the rise and fall of the price of oil, thanks to the ingenuity of the UK’s bookmakers via spread betting. Spread bets are very similar in some ways to CFDs they are settled for cash rather than the underlying instrument, in this case, crude oil.
They allow the user to back an oil price rise or bet on an oil price fall. Spread bets on oil will also allow bettors to deal in contracts that are a fraction of the size of the exchange-traded futures, and over a variety of time frames. The significant difference between the types of contract is their tax treatment.
Under current UK legislation, (at the time of writing) profits made from betting by individual UK taxpayers are not subject to tax whereas any profits made through CFD trading are potentially liable for tax.
However, any losses incurred through spread betting cannot be offset against capital gains made elsewhere whereas losses made in CFD may be offset against other capital gains.
Best platform for trading oil ETFs
Saxo Markets is the best platform we feature for trading oil ETFs as you can buy them as an investment for long-term capital growth in a GIA or ISA account, or for short-term speculation trade them as a DMA CFD.
ETFs or Exchange Traded Funds are open-ended funds that aim to replicate the performance of a given instrument, sector or investment style.
For the most part, ETFs offer what is known as passive investing that is they aim to track a particular benchmark or commodity, rather than outperform it. ETFs are tradeable in the same way that individual shares are.
As such ETFs offer a low-cost way for investors to track the rise and fall of major commodities, allowing us to quickly gain exposure to all sorts of global market themes from one account and one product type.
The ETFs, which track oil prices, aim to mirror their performance and they will usually own a basket of oil futures or other derivative contracts on oil and perhaps even physical oil itself to do so.
Investors and traders who are bullish of the oil price would typically buy an ETF while those who are bearish of would usually sell one. It is possible to sell short of an ETF, i.e. sell it in the hopes of repurchasing the position at a lower price for a profit, but it’s best to check the requirements for doing so with your broker before proceeding.
There are more than 20 ETFs and similar products which track Oil prices, though the United States Oil Fund (Ticker USO) is probably the best known and most widely followed among them. USO tracks WTI crude its stablemate the United States Brent Oil Fund (Ticker BNO) tracks Brent crude.
Be aware though that some oil ETFs and ETF type products may be leveraged and or directional in nature.
Oil Trading FAQ:
When does oil trade online?
Oil markets trade around the clock from late on Sunday evening to the close of the markets in New York late on Friday. There are trading breaks; for example, the CME takes a 60-minute break in WTI trading each day at 5 pm US time(EST).
How liquid is oil trading?
Oil markets are very liquid as a rule and are at their busiest at the points in the day when both European and US markets are open. They can be less liquid in the Asian sessions when traders in London and New York and not active in the markets.
How volatile is trading oil?
Very. In recent times oil markets have become more volatile, experiencing significant moves in either direction though these moves have been driven more by changes in expectations around supply and demand and less by political tensions, that were once the primary driver of price changes.
Critical economic data out of major economies such as the US and China or changes in trade policies and barriers have replaced middle east tension as the primary influence on oil.
News from the big three producers Saudi Arabia, Russia, the USA and the OPEC cartel still matters to oil markets but OPEC’s influence has been dramatically reduced since the oil shocks of the 1970s.
What is Brent Crude?
Brent crude oil is a type of crude oil produced in the North Sea. Light and sweet (low sulfur content), Brent is a popular energy and is used to benchmark other crude products. Trading in Brent rivals that of the US West Texas Intermediate (WTI) crude.
What currency is oil traded in?
WTI and Brent crude are an internationally important contract and trading is priced in US Dollars.
Where can you find oil trading news and forecasts?
Major news agencies such as Reuters and Bloomberg are the first port of call to any breaking news of things that will move oil prices such as:
- Supply and demand data (via regular data releases)
- Opec meetings
- Geopolitical events
Also remember to look at data releases for the week ahead. This will give you some ideas about the forthcoming things that traders will be looking at. In most tables there will be a row of ‘expected value’ of the data. Note them.
For example, the Energy Information Administration (EIA) reports crude storage levels regularly (known as Weekly Petroleum Status Report). Sometimes, these data can impact crude prices significantly, especially when the data deviates from market expectations..
Can you invest in Brent Crude?
Yes, there are some crude oil-related ETFs such as ETFS Brent Crude attempt to track the price of brent crude futures. A major problem with these ETFs is the rollover cost associated with selling expiring futures contract and buying new ones. This may eat into returns.
Brent Crude is a type of commodity. There is no dividend, earnings or share buybacks. Basically one buys crude oil hoping prices will appreciate. But if supply and demand are in equilibrium, prices may stagnant. Worse, if supply is greater than demand, crude prices can crash and stay low for years.
Can you make money trading oil?
You you can profit from trading oil if you call the market correctly. However, you can also lose money quickly. Remember, oil trading is based on futures, meaning that margin is low and leverage high. So you need to have the right strategy at the right time.
What moves oil prices?
In the longer term, prices will gravitate around supply and demand. In the short to intermediate-term, investor expectations, market psychology and unexpected events all play a crucial role in determining oil prices.
In 2015-2016, for example, traders took fright from falling demand and oversupply of crude oil. Coupled with strengthening USD, this led to substantial Brent price weakness (see chart one above). Brent plunged from $110 to $30 in about 18 months.
What is interesting about this episode is that prices broke down ‘suddenly’ in 2014 and never recovered. The downtrend then overshot to the downside and recovered sharply.
All of these movements were driven by market psychology. The longer the price trend, the more extreme market psychology becomes. Brent crude was caught in a self-reinforcing loop, which reinforced the downtrend until the trend became very oversold and rebounded sharply in a ‘V’-shaped fashion.