Best Brokers For Trading Crude Oil

The Ultimate Guide to

Choosing a Broker
For Trading Crude Oil

Not sure which broker is right for you?

Don’t worry - we’ve got you covered. In this guide, you’ll learn:

• Why scored high for trading crude oil (Jump to section)
• Who is (and isn’t) suitable for (Jump to section)
• An in-depth feature comparison of the top #3 brokers (Jump to section)
• An overview on trading crude oil (Jump to section)

Ready?

Part 1

Why Choose
For Trading Crude Oil?

scored best in our review of the top brokers for trading crude oil, which takes into account 120+ factors across eight categories. Here are some areas where scored highly in:

offers one way to trade: . If you wanted to trade USCRUDE through copy trading or other means, skip to part two.

The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.

have a trust score, which is . This is largely down to them being regulated by , segregating client funds, being established for over years, and much more. For comparison:

Trust Score comparsion

The second thing we look for is the competitiveness of the spreads, and what fees they charge. We've compared these in detail in part three of this guide.

Part 2

Who is (& Isn’t)
Suitable For

As mentioned, allows you to trade in one way: .

To trade with , you'll need a minimum deposit of $. offers a range of different account types for different traders including a , .

Finally, isn't available in the following countries: . They do not offer islamic accounts either.

Part 3

A Comparison of vs. vs.

Want to see how stacks up against and ? We've compared their spreads, features, and key information below.

Spread & fee comparsion

Comparison of account & trading features

Part 4

Popular Commodity for Traders: Crude Oil

Oil Industry Overview

The Oil industry is one of the largest industries in the world estimated to be worth over 1.36 trillion dollars in 2016. The Organization of the Petroleum Exporting Countries, more commonly known as OPEC is made up of 13 countries and represent a large portion of the oil industry, exporting over 338 billion dollars of oil in 2016. The demand for crude oil is unlikely to end as it is an essential raw material for over 6,000 products we use every day including petrol, plastics, fertilisers, aspirin, shoes, bubble gum and much more.

Geographically, the oil industry is dominated by the Middle East who export over 20,619,000 barrels per day which represent over 46% of global oil demand. Russia and Saudi Arabia are producing approximately 26 percent of the total global oil production and are currently considered to be the world’s top oil producing countries.

Annually, over 4 millions tonnes of oil is consumed globally and The United States is the single largest consumer of oil going through over 19,396,000 barrels per day.

Global Oil Industry Statistics (By Statista.com)

Popular Traded Oil Types

With such high demand for oil, it is a highly liquid commodity and due to its main geographical sources combined with the political environment, it is a highly volatile market and prices can change drastically (demonstrated in the historical price table below). These two characteristics, high liquidity and volatility, are important for traders who are looking for instruments to day trade and make crude oil a popular instrument for traders.

Average annual UK Brent Crude Oil Price for last ten years (US dollars per barrel)

Crude Oil is one of the most commonly traded commodities and is the most popular traded energy future (As of 3 Feb 2017 according to CME Group Top 10 Energy Products List). It is mainly traded on the New York Exchange, ICE futures and the Central Japan commodity Exchange(C-COM). Other popular commodities like Gasoline and heating oil are the derivatives of crude oil.
The three popular benchmark oils which most prices are pegged against are the Brent, WTI and the Dubai. Brent is the most popular and make up 2/3’s of all crude contracts.

The Top 3 Benchmark Oils: Brent, WTI and Dubai

Brent Crude, WTI and the Dubai are the main three benchmark oils which set the prices for their respective regions. All oil is not created equal and they are judged by their “sweetness” and “lightness”.

Crude oil that has lower levels (under 0.5%) of sulphur are known as sweet crude. Oil that contains a higher amount of sulphur is referred to as “sour”. Sulphur is a corrosive which results in higher costs of refining, storing, transporting and maintenance of sour crude, therefore sweet crude will command a premium over sour crude.

Another important characteristic is the lightness of the oil measured by API gravity set by the American Petroleum Institute. The basic premise of the test is to compare the Oil’s heaviness with that of water. If the API gravity is more than 10 than it will be regarded as a light oil and if it is less than 10 then it will be regarded as a heavier petroleum liquid.

Light oil is seen as the better oil as it requires less effort and cost to refine into premium products like gasoline and diesel fuel. Therefore a combination of light and sweet would be the highest quality crude oil.

Brent oil is lighter than WTI and it is taken from 15 different oil fields in the North Sea. Brent oil is refined in the west Europe and it is regarded as the main benchmark for other crude oils in Europe. When financial news in the UK and other European countries reference the price of oil, it is normally referring to the price of Brent oil.

The West Texas Intermediate more commonly known as WTI Crude is the benchmark for the US whilst the Dubai is the benchmark for Persian oil.

Trading as a CFD vs a Future

Two popular Crude oil futures for trading are the US WTI which is traded on the New York Exchange (NYMEX) and the Brent crude which is traded on the Inter Continental Exchange (ICE).

A future contract is a standardised forward contract which means that among other details, its price, size and settlement date is fixed. CFDs in comparison to Future contracts have a much smaller contract size and most CFD brokers like London Capital Group will offer leveraged trading for clients to trade larger positions with a smaller capital requirement.

A simple example of trading WTI Crude oil comparing a Futures contract vs a CFD

Minimum Futures Contract Trade:
Average monthly price for WTI Crude in December 2016 of $51.97 / barrel
Contract size for Crude = 1,000 barrels
Therefore a minimum trade for a single futures contract would be 1000*$51.97 = $51,970 for WTI Crude.

Minimum Trade with CFD
London Capital Group offer a minimum margin for US Crude (WTI) of 0.5% and a minimum trade size of 0.1 lot (contract size). Therefore the cost of a trade of US Crude using London Capital Group in this example would be $259.85 (100*51.97/200=259.85).

London Capital Group Contract Specifications for Crude Oil

To see more trading details about the 5,000+ instruments on offer, click here: London Capital Group

*All information collected from https://www.lcg.com/uk/, see website for full terms and conditions. Your capital is at risk. Last updated on February 6, 2017.

WTI Crude Futures Product Specs (for full details visit ICE)

Difference between Spot Oil and Oil Futures

Summary: Trading Crude Oil

Crude oil is one of the most popular traded commodities due to its highly liquid and volatile nature. A CFD Broker will allow a trader to trade crude oil with a smaller capital requirement due to leverage and smaller contract sizes.