Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors.
Before trading, please ensure that you fully understand the risks involved
Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors. Before trading, please ensure that you fully understand the risks involved
Investement Consultancy Research

Oil is one of the most actively traded commodities in this region. It is an important driving force of the economy. Globally, it's not only used as petroleum for travel and transportation purposes, but also as a component in producing consumer goods.

The increased volatility throughout recent years where supply and demand is constantly changing, so is the price of oil. There are various ways of investing in oil via cash or future contract, equities or ETF's. Oil demand has soared in the wake of energy crisis amid reopening of economies and easing travel restrictions.

Ways to Trade Oil

Stocks: Purchasing stocks of oil companies is one of the ways to get exposure to oil trading.
Futures: Oil futures are an agreement to buy or sell an exact amount of oil for a set price at a set date in the future. This is the most popular method of trading oil. However, trading on oil futures can be a risky process as futures prices will also fluctuate depending on the price of oil, which is impacted by many external factors.
ETF’s: Exchange-traded funds are a type of investment fund that can grant traders exposure to the oil market through holding a collection of underlying assets, which in this case would be shares in oil companies. Crude oil ETFs are bought and sold in the same way as many other shares in the stock market. When the price of oil fluctuates, this also has an influence on the share price of oil companies and subsequently, the value of the ETF.

5 Good Reasons to Trade Oil

Oil prices are more volatile: Supply and Demand mainly influence oil prices. If oil market supply is constricted, and global economy is booming, demand increases, consequently pushing oil prices up. Inversely, if global economic growth slows, demand falls, likely inducing a drop in prices.
Diversify your portfolio with commodities trading: Commodities like oil are useful in countering price movements in a traditional equities’ portfolio.
Inflation hedge: Oil trading is used to reduce or eliminate a company’s exposure to fluctuating oil prices.
Liquidity: Oil futures are one of the most liquid investments because of the high volume that is traded every day.
Irreplaceable resource: Oil is an irreplaceable resource and has inevitable demand. However, most of the crude oil reserves in the world are in regions that have been prone to economic and political upheavals. Weather also plays a significant role in the supply of crude oil, leading to price fluctuations.

Top 6 Popular Oil Trading Stocks

Apart from crude oil trading another better way is trading oil stocks companies involved in oil extraction, production, distribution and refinery.

1

Pioneer Natural Resources Co

2

ConocoPhillips

3

Baker Hughes Co

4

Schlumberger Ltd

5

Chevron Corp

6

Exxon Mobil Corp

Oil Companies Performance in 2021 till date

Company Ticker CMP (in $) 2020 Closing (in $) 52 Week Low (in $) 52 Week High (in $) YTD Return (in %)
Pioneer Natural Resources Co PXD 187.34 111.58 85.68 196.64 67.9%
ConocoPhillips COP 75.75 38.79 33.6 77.98 95.3%
Baker Hughes Co BKR 25.28 20.21 16.95 27.66 25.1%
Schlumberger Ltd SLB 34.14 21.55 17.16 36.87 58.4%
Chevron Corp CVX 116 81.17 79.91 116.21 42.9%
Exxon Mobil Corp XOM 66.36 39.35 34.87 66.38 68.6%
EOG Resources Inc EOG 97.11 48.19 40.12 98.2 101.5%
Suncor Energy Inc SU 26.25 16.38 13.53 26.97 60.3%

Dated: 9 Nov 2021

The Main Benchmarks of Crude Oil Trading

There are dozens of different oil benchmarks, with each one representing crude oil from a part of the globe. However, the price of most of them are pegged to one of the following three primary benchmarks:

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Brent Crude: Generally, two -thirds crude oil traded around the world reference Brent Crude, making it the most widely used marker of all. These days, “Brent” refers to oil from four different fields in the North Sea: Brent, Forties, Oseberg, and Ekofisk. Crude oil from this region is light and sweet, making them ideal for the refining of diesel fuel, gasoline, and other high-demand products. As the supply is waterborne, it’s easy to transport to distant locations. Crude oil trading is possible on the platform in cash and futures contracts.
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West Texas Intermediate (WTI): WTI refers to oil extracted from wells in the U.S. and sent via pipeline to Cushing, Oklahoma. The fact that supplies to oil market are land-locked is one of the drawbacks to West Texas crude as it’s relatively expensive to ship to certain parts of the globe. The product itself is very light and very sweet, making it ideal for gasoline refining. WTI continues to be the main benchmark for oil consumed in the United States.

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Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors.
Before trading, please ensure that you fully understand the risks involved
Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors. Before trading, please ensure that you fully understand the risks involved
*Disclaimer: Century Financial Consultancy LLC (“CFC”) is Limited Liability Company incorporated under the Laws of UAE and is duly licensed and regulated by the Emirates Securities and Commodities Authority of UAE (SCA). Services offered by CFC include promotion and introduction of financial market products that are traded on margin and can result in losses that exceed deposits. Trading with leverage carries a significant risk of losses and as such margin products may not be suitable for everyone; you should consider your investment objectives, risk tolerance, and your level of experience with these products, and ensure that you understand the risks involved and seek independent advice from professionals/experts if necessary. CFC is not responsible or liable for any result, gain or loss, based on this information, in whole or in part. Refer to risk disclosure on our website.

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