How to invest in crude oil? Trading in oil and investing in energy markets is an attractive investment opportunity for many venture capitalists. Perhaps you thought you would seize these opportunities as well, especially with crude oil prices reaching historic levels with the supply crunch and increased demand, in addition to the fact that we are not going to be cutting out oil and fossil fuels any time soon. Do you want to trade oil now and don’t know how and where to start? This guide will give you a complete explanation of what is crude oil, its types, how crude oil is traded and are you looking for how to invest in oil via CFDs, oil futures or oil stocks. Read on with us in this step-by-step guide to trading oil.
How to invest in crude oil
Initially, the type of crude oil depends on the geographical location of the oil field and the characteristics of the oil itself. While there are hundreds of types of crude oil traded in the global market according to the investment in crude oil. The two main types of crude oil serve as global benchmarks for oil prices: Brent and West Texas Intermediate as follows:
- Brent Crude Oil: Brent oil comes from 15 different oil fields in the North Sea.
- It is also characterized as a “light and sweet” oil, although it is not as “sweet” or “light” as WTI.
- Up to two-thirds of global oil contract deals are traded on Brent crude oil.
- WTI: As the name implies, WTI is obtained from US oil fields mainly in Texas, Louisiana and North Dakota.
- It is referred to as “Light Sweet Crude Oil” due to its low density and low sulfur content.
- These properties make it less expensive to produce and easier to refine than “heavy” or “sour” crude oil. West Texas Intermediate Crude is the main benchmark for oil consumed in the United States by investing in crude oil, which is commonly called crude oil.
Crude oil and natural gas can be traded through products suitable for both long-term and short-term investment. Either by buying and selling the underlying asset or by using a trading platform to speculate on the movements of crude oil prices.
What are the methods of trading oil online
There are a number of ways to trade oil, including the forex and stock markets and investing in crude oil:
- One way to invest in oil is to buy shares of a company that specializes in the oil industry. Some of the best and most popular stocks to buy are ExxonMobil (XOM), PetroChina (NYSE: PTR), and Royal Dutch Shell (NYSE: RDS.B).
- It is necessary to know that although there is a relationship between the price of crude oil and the profits of an oil company, this rule is not always true.
- Disasters such as the oil spill can seriously damage an investment.
- Investing in oil is more risky than investors can afford.
- Hence, it is not recommended for those who are afraid of taking risks.
- Another way to trade oil is forex based on investing in crude oil, which was the most profitable way to invest after the financial crash of global stock markets.
- Crude oil is an important source of diversification that forex traders can adopt.
How to trade oil online for beginners
So that you can trade oil and profit as a beginner trader and do not have a lot of experience that supports you in profit from the first deal and protects you from huge losses, you have to follow some tips such as:
- Double-check with the brokerage firm you will be trading with, and make sure they are reliable, legal and reputable.
- Do not start trading oil unless you have trained well and learned a lot about oil, how to invest in crude oil, and the right time to trade, whether to buy or sell.
- Don’t be adventurous: it can be very expensive to get into trading oil or any other commodity, so you should start with a small amount.
- Know the rate of supply and demand: Oil prices change very quickly according to the volume of supply and demand, and in order to ensure the success of your deal and make some profit, be aware of the prices first.
- Take advantage of your tools: The trading platform provides you with many tools that will benefit you in trading, such as stop-loss orders.
- It allows you to close the position when the prices are falling to protect you from huge losses, know well these tools in your favor.