Oil futures trading offers traders the opportunity to express their directional bias through a futures contract, whereby they agree to buy or sell a certain amount of a product at a specific price at some point in time. The number varies, depending on the type of contract traded, but typically it’s thousands of barrels. The majority of contracts are non-deliverable, meaning that they don’t require physical delivery of actual oil; they’re settled financially at their expiration date with a debit or credit in the trader’s account.Find out :theinvestorscentre.co.uk

Energy companies use futures to hedge risks and stabilize costs, but the market is also driven by speculation. Professional traders and investment firms dominate these markets, taking positions to offset physical exposure and speculate on long- and short-term price direction. They compete with banks, hedge funds and commodity trading advisors who don’t have direct commercial interests, but are looking to profit from changes in prices.

Technical Analysis for Successful Oil Futures Trading

The most popular crude oil futures contracts are Brent Crude and West Texas Intermediate, traded on the Intercontinental Exchange (ICE) and New York Mercantile Exchange respectively. They are global benchmarks for oil prices, reflecting global production and demand. The market is further influenced by reports that show weekly inventories of petroleum products in the United States and China, as well as news of supply disruptions.

Traders should know that this is a highly volatile market, and can be very risky. Only investors that understand the risks and who have a level of financial resilience to take large losses should consider getting involved.