Crude Oil Spread Bet
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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 and it shows the above spread of $132.56 - $132.61 and you think that the Crude Oil (August) market will finish higher than $132.61.
- You think the Brent Crude Oil (August) will close higher than $132.61
- So you go long (buy) crude oil. You invest £2 per ¢
- The value of the market 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
= ($133.90 - $132.61) x £2 per ¢ stake
= ($1.29) x £2 per ¢ stake
= 129¢ x £2 per ¢ stake
- Profit = £258
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 and had the Crude market closed 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
= ($131.50 - $132.61) x £2 per ¢ stake
= -$1.11 x £2 per ¢ stake
= -111¢ x £2 per ¢ stake
- Loss = -£222
Crude Oil Notes:
- You can spread bet on Crude for as little as £1 per ¢ or €1 per ¢ with GFT, IG Index, World Spreads, Spreadex, FinancialSpreads.com
- Both US Crude Oil and Brent Crude Oil are priced in US$. 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
- Prices correct as of 16-Jun-08
Where to Financial Spread Bet on Crude Oil?
You can spread bet on Crude Oil with any of the following companies:
 > Capital Spreads
 > Financial Spreads
 > GFT
 > IG Index
 > paddypowertrader
 > Spreadex
Where to Find Live Prices?
All of the above companies provide access to real-time prices to their account holders.
"Crude Oil Spread Bet" written by RThomas, last updated 26-Oct-2008
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