1. About Crude Oil Spread Betting
Along with gold, crude oil is one of the most traded commodities in the financial markets. This is particularly true when it comes to spread betting.
An obvious reason for such a prominent position is the fact that crude oil products form the basis of much of modern day power, transportation and plastics manufacturing. Oil is a highly sought after commodity.
Investors who trade the crude oil markets should aware that they can be volatile.
The price of crude oil is often affected by supply factors that include:
- Severe Weather Conditions – eg Hurricane season in the Gulf of Mexico
- Conflicts – eg potential problems in the Middle East or attacks on pipelines in Nigeria
- OPEC – The Organisation of Petroleum Exporting Countries who attempt to control supply in order maintain a high price
Other oil price factors include:
- Equities prices – as the World economy recovers in 2009 and equities prices have increased, oil prices have seen a parallel rise on the basis that a recovery will lead to an increase in oil demand
- US Driving Season – America is the number one oil consuming nation and the US Driving Season is known to have an impact on oil prices as demand increases
- Weekly US Oil inventory numbers:
- High inventories suggest excess supply and a possible decrease in price
- Low inventories suggest low supply and possible increase in price
- Inventory data is typically released every Wednesday at 3.30pm UK time
When spread betting note that there are two major oil markets:
- Brent Crude Oil, also known in spread betting as UK Crude Oil
- US Crude Oil, also known as WTI (West Texas Intermediate), Nymex Crude Oil and Light Sweet Crude.
Spread bets on either crude oil market allows an investor to take a long, or a short position on the future price of crude oil. So if, after suitable research, you believe that the oil market will slump, you can spread bet on oil to go down.
Spread betting on oil is leveraged and so whilst you can win more than your initial stake you can also lose more than your initial stake. This means that you should be fully aware of the potential benefits and pitfalls before placing any trades.
2. Where can I Financial Spread Bet on Crude Oil?
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| UK Oil Daily (Brent) |
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| UK Oil Future (Brent) |
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| US Oil Daily (WTI) |
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| US Oil Future (WTI) |
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The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.
3. How to Spread Bet on Crude Oil
As with many markets, you can spread bet on the future value of commodities. In this case you can spread bet on the Brent Crude Oil (August) market closing higher than $132.61 per barrel on 14-Jul-08.
With Crude Oil markets, you trade in £x per ¢, where a ¢ is $0.01 of Brent Crude Oil movement. For example if your stake was £3 per ¢ and the Crude Oil price moves by $0.90 then that would be a £270 difference to your profit (or loss).
$0.90 x £3 per ¢ = 90¢ x £3 per ¢ = £270.
So let's say you check the live prices on an online spread betting service like Financial Spreads, which shows the above spread of $132.56 - $132.61, and you believe that the Crude Oil market will finish higher than $132.61.
- You think that Brent Crude Oil (August) will close higher than $132.61
- So you go long (buy) crude oil. You invest £2 per ¢
- The price of a barrel of crude oil increases. You let your bet run to the settlement day, 14-Jul-08
- The market settles at $133.90
- Opening price = $132.61
- P&L = (closing level - opening level) x stake
- P&L = ($133.90 - $132.61) x £2 per ¢ stake
- P&L = ($1.29) x £2 per ¢ stake
- P&L = 129¢ x £2 per ¢ stake
- P&L = £258 Profit
Of course, it is not always that easy and the oil market can be unpredictable. If this Crude Oil Futures market did not work out for you, with the market closing lower at $131.50, then you would have lost on this spread bet.
- Opening price = $132.61
- P&L = (closing level - opening price) x stake
- P&L = ($131.50 - $132.61) x £2 per ¢ stake
- P&L = -$1.11 x £2 per ¢ stake
- P&L = -111¢ x £2 per ¢ stake
- P&L = -£222 Loss
Prices correct as of 16-Jun-08
Oil Spread Betting Notes:
- You can spread bet on Crude for as little as £1 per ¢ or €1 per ¢ with GFT, IG Index, Spreadex and FinancialSpreads.com
- Both US Crude Oil and Brent Crude Oil are priced in US$. Therefore the price of Oil will ‘often’ increase when the US Dollar decreases against the Euro and Sterling. Likewise Crude Oil will ‘often’ go down when the Dollar strengthens
4. Where can I find Real-Time Crude Oil Spread Betting Prices?
All of the above companies provide access to real-time indices prices to their account holders.
Note that you may need to log into your account in order to see the live Crude Oil prices.
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www.FinancialSpreads.com Narrow Spreads, Free Charts and Live Prices.
No Fees, No Commissions, Spread Bet on Shares, Indices, Forex, Commodities Apply Now.
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5. Where can I find Crude Oil Candlestick Charts?
A number of the spread betting companies offer a variety of charts, including candlestick charts. Note that you may need to open an account with the respective company in order to see the charts and/or have full access to real-time charts that you can manipulate. Spread betting accounts are subject to status, terms and conditions.
Candlestick charts are currently available with:
Charts may also be available from other spread betting companies.
Example commodities charts from Financial Spreads:
Above: UK Crude Oil - 30 Min Candlestick Chart:
Below: US Crude Oil - Weekly Candlestick Chart:
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www.FinancialSpreads.com Narrow Spreads, Free Charts and Live Prices.
No Fees, No Commissions, Spread Bet on Shares, Indices, Forex, Commodities Apply Now.
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"Crude Oil Spread Bet" last update by RThomas, 11-Mar-2010
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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