How to trade oil futures

Oil trading

As popular as investing in the stock market, crude oil futures are one way to buy an abstract concept, and then sell it at a profit. Futures are essentially market commodities, such as gold, diamonds and oil, and when you buy it, you are suggesting that you think that this commodity will increase in price in the future. Buying a Futures contract means that you can then buy that commodity at the price demanded, regardless of any other change in price. Commodity or futures trading has increased in the last few years, as analysts believe that they are a way of securing an investment and avoiding severe crashes.

crude oil

Crude oil and futures

One of the most popular types of commodities being traded is crude oil. In order to learn how to trade oil futures, you need to think about where that commodity is most commonly traded at. Three popular options are the Intercontinental Exchange, or ICE, which offers oil contracts per 1000 barrels. The New York Mercantile Exchange, or NYMEX, offers crude oil contracts between Sunday and Friday, and between 6pm and 5.15pm, so that each commercial day lasts for just over 23 hours. The Multi-Commodity Exchange offers you contracts worth around 100 barrels each, so are suitable if you have a small capital, and trade occurs between Monday and Saturday, and there is no trading on Sundays.

Trading strategies

crude -oil-trading

Understanding basic trading strategies can help you to make sure that you invest your futures wisely, and can help you to protect your investments. Crude oil in particular is known for extreme volatility in the price, so that they may start off very low, and then increase as the market closes, or even start high, and drop down suddenly as the day ends. This makes trading crude oil very difficult, and can mean that you struggle to develop a particular plan of attack. Many experts advise you to trade only in the prime time periods, which are between 10 to 9 in the morning, and 10:30 am New York Time.  During this short time-frame, a large number of futures will be traded. So you can get most of your work done in those short periods, and then leave everyone else to ride the roller-coaster of up-and-down prices. You should also consider reading the Weekly Inventory report, which is published mostly on a Wednesday. This information will tell you exactly what is happening with crude oil in the different markets.


The Oil Trading Group Services provides trading tools to help you learn how to trade oil.