How to Trade Oil

There are several ways you can trade oil. These include crude oil futures, options, exchange-traded derivatives, energy equities, and sector mutual funds.

In this guide, we will take a look at how to trade oil. We will also look at the best trading platforms for oil and understand how oil trading works. Let’s get started!

Key Points 

There are several things about oil a trader must remember. Let’s look at some key points before getting started with our guide. 

  • There are many ways to speculate on the price of oil. These include trading oil futures and options, related ETFs and ETNs, and energy stocks. This can be done directly or via mutual funds and ETFs. 
  • Commodity and midstream ETFs can be subject to tracking errors. This means they may need to deliver the underlying index’s return or crude prices fully. 
  • Oil is a highly volatile commodity essential to global markets, manufacturing, and transportation.

How To Trade Oil In Five Steps 

Before starting with our guide, let’s briefly understand how to trade oil in five easy steps.

  • Step 1: Choose An Oil Trading Platform: When you want to trade oil, the first step is to create an account with an online broker that offers oil trading services. We found eToro to be an excellent option to get started. eToro provides an array of oil trading instruments. These are spread across ETFs, stocks, and financial derivatives. What’s more, opening an account on eToro takes minutes.
  • Step 2: Deposit Funds: Once you have created an account, you must deposit funds into it. eToro requires a minimum deposit of just $10 if you are based in the US or UK. You will not be charged a deposit fee if you fund your account in USD. The platform accepts a variety of payment methods. These include debit and credit cards, bank transfers, and e-wallets.
  • Step 3: Do Your Research: Before you begin trading, you must be thorough with your research. If you are a beginner, news reports and market insights are a good point to start. These could help you assess whether the price of oil will fall or rise.
  • Step 4: Choose Your Oil Market: Once you are done with your research, you must select which oil market you wish to trade. eToro allows US clients to trade oil stocks and ETFs. On the other hand, non-US clients can trade oil through CFDs.
  • Step 5: Trade Oil: The final step is to execute the trade. When you are ready, click on the “Trade” button. Next, enter the amount you wish to place on your oil position. After this step, click the “Open Trade” button and place your order.

Your capital is at risk. 68% of retail investor accounts lose money when trading CFDs with this provider.

What Is Crude Oil?

Crude oil is a naturally occurring liquid petroleum product. It is made up of organic materials and hydrocarbon deposits. The organic remains and hydrocarbon deposits are formed from the remains of plants and animals that lived millions of years ago.

When they died, these organisms were buried under layers of sand, rock, and silt. Subjected to forces such as heat and pressure, they turned into fossil fuel. This fossil fuel can be refined into different products such as diesel, gasoline, liquified petroleum gasses, and feedstock for the petrochemical industry.

Oil is extracted through drilling and is usually found with other resources such as natural gas. Once extracted, crude oil is refined and processed into kerosene, gasoline, and asphalt.

Crude oil ranks among the world’s most important commodities, and its price significantly affects the world economy. Increased oil prices mean higher shipping costs, higher gas prices, and increased consumer input costs. Crude oil prices are driven by factors such as demand and supply. An oversupply significantly lowers prices, while increased demand and lack of supply lead to an increase.

Supply and demand can change depending on geopolitical factors and natural disasters that could impact production.

Reviewing the Top Online Oil Brokers  

The top online brokers are the first thing we will look at in our guide on how to trade oil. If you are looking to trade oil, you must do so through an online broker. You should choose a broker that gives you access to the specific financial instrument you wish to trade. These include oil stocks, derivatives, and ETFs. Now, let’s look at where you can trade oil online.

eToro – Overall The Best Broker For Trading Oil 

eToro is our choice for the best platform to trade oil in the US. The platform was founded in 2007 and has over 30 million clients. Opening an account on eToro gives you access to an array of oil stocks such as BP, Exxon Mobil, Shell, and ConocoPhillips.

Best Commodity Brokers

If you are trading for the first time, oil stocks offer the best avenue to gain exposure to the commodity. You can also look at investing in oil ETFs. These include the United States Oil Fund and the SPDR S&P Oil & Gas Exploration & Production ETF.

Whether you choose a stock or ETF, eToro will not charge any commission. As such, you can also trade ETFs on the platform with some of the most competitive fees available. This is applicable in both the US and world markets. The platform requires traders to meet a minimum trade size of $10. This allows them to gain exposure to oil and other commodities without risking too much capital.

For traders based outside the US, eToro offers oil CFDs. Oil CFDs mirror the real-world spot price of the asset. This means you can trade oil with leverage and even short-sell the asset if you believe its price will decline. Moreover, eToro also allows you to trade crypto such as Bitcoin (BTC), Ethereum (ETH), Shiba Inu (SHIB), and Dogecoin (DOGE).

Features On eToro 

eToro offers users a plethora of trading tools and features. One of its most popular features is Copy Trading. The Copy Trading tool allows traders to mirror the trades of professional and highly successful traders on eToro. This is an excellent and passive way to invest in the stock markets. For example, suppose you invest $1000 in a trader on the platform. This trader allocates 10% of their portfolio to Saudi Aramco. This means you will automatically invest $100 in the company.

Trade Oil via eToro

Smart portfolios are another feature that interests traders. Smart portfolios are professionally managed by the eToro team. Traders can choose from an array of different trading strategies. Strategies include dividend stocks, undervalued stocks, Asian stocks, and stay-at-home economy stocks. eToro also facilitates day trading of stocks with extremely low fees.

Opening An Account On eToro 

How to Trade Commodities

Opening an account on eToro is quick and straightforward. To open an account, users based in the US and UK must make a minimum deposit of $10. For other regions, the minimum deposit ranges from $50 and $200. In some cases, it goes as high as $ 1,000 and even as high as $10,000 for users based in Israel. Moreover, all deposits made using a bank transfer must meet a minimum requirement of $500.

All USD deposits are free, meaning they have no additional deposit fee. eToro accepts a variety of payment methods. These include bank wire transfers, ACH, Neteller, PayPal, Visa, and MasterCard.

What We Like About eToro 

  • ✅ USD deposits are free. 
  • ✅ Extremely low trading commissions. 
  • ✅ Ideal platform for beginners. 
  • ✅ Offers various tools and features such as Copy Trading and Smart portfolios
  • ✅ Accepts several payment methods, including e-wallets, bank transfers, and debit/credit cards
  • ✅ The platform is highly regulated, guaranteeing security.
  • ✅ Offers a dedicated Android and iOS app
Debit Card Fees Free for US-based users
Minimum Deposit  $10 for clients based in the US and UK. Varies in other regions. 
Types Of Markets  CFDs for non-US clients. ETFs and oil-centric stocks. 
Commission 0% commission on ETFs and oil stocks. 

Your capital is at risk. 68% of retail investor accounts lose money when trading CFDs with this provider.

TD Ameritrade – Allows Users To Trade Oil Futures 

TD Ameritrade is the next platform in our guide on how to trade oil. The oil trading platform is a hugely popular US-based broker that allows you to trade several oil futures. Opening an account with the platform will give you access to futures, RBOB, Brent crude, WTI crude, and micro crude.

Regarding pricing, TD Ameritrade charges a rate of $2.25 per futures contract. This is similar to platforms like Schwab, which we shall discuss later. The broker also offers a highly advanced platform called ThinkorSwim, designed especially for futures trading. You can access ThinkorSwim by downloading it on your desktop, downloading the app on Android and iOS, and online.

TD Ameritrade’s ThinkorSwim platform comes with technical indicators, advanced order types, and chart drawing tools. You can access thousands of stocks, many from the oil sector. You can also access options, ETFs, mutual funds, bonds, forex, and more.

What We Like About TD Ameritrade 

  • ✅ Offers users competitive margin funding rates
  • ✅ You can trade oil via futures contracts. 
  • ✅ TD Ameritrade also supports ETFs and oil options trading.
Debit Card Fees Does not support debit/credit cards.
Minimum Deposit  $0 on accounts that are self-directed. 
Types Of Markets  Options, ETFs, and futures 
Commission Starts from $2.25 per contract.

Webull – Purchase And Sell Oil Stocks And ETFs At 0% Commission 

Webull is the next platform in our guide on how to trade oil. The online broker is highly popular with beginners and experienced investors. On Webull, you can access thousands of stocks and ETFs from the oil industry. The platform is ideal for beginners and casual traders looking to invest in the future value of oil. Like eToro, Webull does not charge any trading commission when buying or selling stocks.

webull oil trading platform

The platform also supports fractional ownership of stocks, starting at $5. Fractional ownership for cryptocurrencies begins at $1. Another avenue traders on the platform can gain exposure to oil is through stock options.

However, you must have some prior experience in financial derivatives like options. Stock options on the platform allow you to enter significantly larger positions than what is available in your account. This is because you only need to cover the premium to enter a trade.

Features And Fees On Webull 

Experienced traders on Webull can access an advanced trading suite that allows them to analyze oil prices in real time. There are also charting tools and economic indicators for technical analysis. The main Webull interface makes everything simple, especially for beginners. All they need to do is pick an asset and enter their stake.

Opening an account on Webull is relatively straightforward. Additionally, there is also no minimum deposit requirement. You can fund accounts via bank wire transfers. However, these attract a fee of $8, while deposits made via ACH are free.

Webull also does not support debit or credit card payments. However, the app does offer a dedicated app on Android and iOS. The app is free to download and connects directly to your main account.

What We Like About Webull 

  • ✅ Investors on Webull can trade stocks and ETFs from $5. 
  • ✅ No minimum deposit is required. 
  • ✅ Ideal for beginners and advanced traders.
Debit Card Fees ACH deposits are free. Bank transfers are charged $8.
Minimum Deposit  No minimum deposit requirement. 
Types Of Markets  ETFs, options, oil-centric stocks
Commission 0% commission on all markets. 

Interactive Brokers – A Global Trading Platform Offering Competitive Fees 

Next in our guide on how to trade oil is Interactive Brokers. Interactive Brokers is a US-based brokerage platform allowing users access to oil futures at competitive fees. Fees on the platform start from just $0.85 per contract. The platform has several futures markets, including e-mini crude, crude, and soybean oil.

Interactive Brokers

Like TD Ameritrade, Interactive Brokers is ideal for more experienced brokers seeking an advanced trading suite. The platform offers traders technical analysis tools and comprehensive market insights. Additionally, you can also trade oil on margin. Funding rates on the platform are variable but usually extremely competitive.

Interactive brokers also allows you to trade stocks and ETFs from thousands of markets and dozens of exchanges. The platform also offers currencies, options, bonds, and funds. Those looking to invest in oil-centric stocks can avail of fractional trading offered by the platform. You can also trade US-listed stocks on the platform commission-free.

What We Like About Interactive Brokers 

  • ✅ Interactive Brokers has an excellent reputation. 
  • ✅ You can trade futures starting from just $0.85 per contract. 
  • ✅ The platform offers several commodity trading accounts to choose from.
Debit Card Fees Does not support debit cards
Minimum Deposit  $0 on self-directed accounts
Types Of Markets  Options, ETFs, futures, mutual funds
Commission Starts from $0.85 per contract. 

Schwab – Offers Access To A Range Of Oil Futures Markets 

The last platform we are going to talk about in our guide on how to trade oil is Schwab. Schwab is an excellent choice for those looking to trade oil futures. The broker has a well-established reputation in the US markets and offers access to thousands of markets. Oil futures can be traded starting at $2.25 per contract. The platform offers a humongous range of investment tools, allowing traders to predict future oil price movements.

Schwab Oil Trading Platform

For example, Schwab offers its users a trading calculator. This calculator allows them to check margin requirements, real-time charts, and market insights from industry experts. Schwab also does not have a minimum deposit requirement on self-directed investment accounts. However, if you plan on trading oil on margin, an account minimum of $2000 is required.

Margin trading fees will be applicable as long as the leveraged position is open. However, Schwab is extremely competitively priced.

What We Like About Schwab 

  • ✅ Schwab offers oil-centric mutual funds. 
  • ✅ Offers a range of oil futures and options. 
  • ✅ There is no minimum deposit requirement on standard self-directed accounts.
Debit Card Fees Does not support debit cards.
Minimum Deposit  $0 on self-directed accounts
Types Of Markets  Options, oil-centric stocks, ETFs, Futures
Commission Starts from $2.25 per contract

Trading Oil – An Overview 

Oil ranks as one of the most in-demand commodities in the world. As with any other asset, oil prices depend on demand and supply. However, oil prices are often artificially manipulated by entities looking after their interests. This is because the Organization of the Petroleum Exporting Countries (OPEC) controls a large percentage of global oil production.

Trading Oil

This is why keeping tabs on any developments related to OPEC when trading oil is a good idea. When trading commodities, you must predict future price movements and whether they rise or fall. The main benchmarks to consider and concentrate on are the West Texas Intermediate (WTI) and Brent crude.

If you can speculate on the future price movements of oil and whether it rises or falls, you can make a profit. However, you must also consider what market best suits your skill set. Traders based outside the US can speculate on the price of oil via CFDs. CFDs, or Contract For Difference, is a financial instrument that tracks oil prices on a second-by-second basis. However, US-based traders do not have access to CFDs. These traders can trade oil on margin in alternative markets, such as futures and options.

However, futures and options are complex financial derivatives and often require traders to open a margin account. Under SEC rules, a deposit of $2000 or more is required. If this figure is too much, traders can opt for oil stocks or ETFs.

Why Should You Trade Oil? 

Trading oil is not suitable for all investment profiles. This is especially true if you are looking to build a long-term portfolio. However, there are several reasons why you should trade oil. Let’s go over some of them.

You Can Make Above-Average Gains 

In 2020, the price of oil dropped significantly, slipping below $20 per barrel. Let’s assume you place a long order at this point and hold on until 2022 when oil crossed $100 per barrel. This would have seen you make over 500% gains. Even if you had entered the oil markets through oil stocks, you would have still made considerable gains. Furthermore, you can take advantage of leverage when you trade oil through financial derivatives such as options, futures, or CFDs.

Volatility 

While oil is the most in-demand commodity in global markets, it is also highly volatile. This is because several factors can impact the price. The most important factor influencing the price of oil is demand and supply. You should also consider the impact OPEC can have on the price of oil. Furthermore, external geopolitical events can also significantly impact the price of oil.

Oil Price Chart

Such volatility may spook investors who are looking for stable assets that have the potential to grow over time. However, it may appeal to short-term and day traders, who could make significant gains. Always remember the value of oil changes in cycles and trends. Furthermore, volumes are extremely high in the oil trading space. This means there will be zero issues when it comes to liquidity.

Trades Are Based On Global Sentiment 

Knowing if oil will go on an upward or downward trend is easily achievable, even for beginners. Let’s understand how with the help of an example. When the Covid-19 pandemic hit in 2020, global travel came to a complete halt. Travel was restricted, and lockdowns were imposed, completely stopping movement. Thanks to these factors and actions, the demand for oil hit an all-time low. In April 2020, the price dropped below the $20 mark.

Due to a lack of demand, along with supply chain issues, short-selling oil would have been a wise choice. Let’s look at another example. Due to the ongoing situation in Ukraine, Western countries have placed sanctions on Russia. Russia is one of the largest exporters of oil. As a result of the sanctions, we have seen a considerable spike in the price of oil.

Even if you are a beginner, it is relatively easy to determine how oil prices would move by looking at factors that could impact demand and supply.

How To Make Money From Oil Trading 

The ability to make money from oil trading depends on how successfully you predict price movements. The amount of money you can make from the oil market also depends on the instrument. Let’s understand this with an example.

How to Trade Oil

If you invest $5000 into an oil-centric stock whose value increases by $50%, you would look at gains of $2500. However, if you trade oil via derivatives, the gains depend on the price of oil when you open and close positions. Let’s try and understand this better.

Let’s say you are based outside the US and will open a CFD position worth $2000. When you open your position, oil is at $40 per barrel. You decide to keep the position open for a few days and close the position at $50 per barrel. Closing the position at $50 per barrel yields a 25% gain. This means you make a $500 gain on an initial stake of $2000.

When trading oil via options or futures, profits depend on several factors. In futures, it depends on factors such as the strike price and the value of oil when the position is closed. When it comes to options, it depends on the premium you paid.

How Does Oil Trading Work? 

So far, our guide has covered all the basics. Now, we will take a closer look at how to trade oil. This section will help you approach the oil markets with an eyes wide open approach.

Oil Trading Markets 

Several variations of oil can be bought and sold. Out of these, the most common benchmarks are the WTI and Brent crude. The WTI is primarily used in the US, while the latter is used globally. If you are a beginner, the best option is the Brent Crude market. This is because market insights and research reports analysis are typically based on Brent crude prices.

Like most other commodities, oil prices are also quoted in USD. The value of oil changes almost on a second-by-second basis, based on global demand and supply. Let’s look at the different financial instruments you can trade oil with.

Oil CFDs 

Let’s assume you are based outside the US. In such a scenario, CFDs are the best way to trade oil. CFDs are created by online brokers who track the real-world price of oil. All you need to do with CFDs is predict if oil prices will rise or fall. However, unlike futures or options, oil CFDs don’t expire. This means you can keep your positions open for as long as possible. However, CFDs do attract overnight financing fees.

CFDs can be traded with leverage. Retail clients in Australia, the UK, and the European Union can trade oil CFDs with 20x leverage. This means a position worth $100 is turned into a trade value of $2000.

Stocks And ETFs 

If you are a beginner, we recommend avoiding complex financial instruments like futures and options. Instead, you can gain exposure to the oil markets through relevant stocks. There are several oil companies listed on US stock exchanges. This makes it easy for you to diversify your holdings. Stocks in this sector are closely interlinked with the price of oil. When oil prices rise, the relevant stocks also register an increase. However, the price of oil and the stocks in question will never correlate 100%.

Shell Oil Stock

ETFs are another excellent avenue for beginners to trade oil. Regarding ETFs, you can consider the United States Oil Fund. This ETF tracks the WTI Light Sweet crude oil price. Through the ETF, you can get a much better chance of gaining exposure to oil prices in a diversified manner.

Another ETF worth considering is the SPDR S&P Oil & Gas Exploration ETF. The ETF invests in over 60 companies operating in the oil and gas industry. These include EQT Corporation, Antero Resources, and Southwestern Energy.

eToro is an excellent platform to consider should you invest in oil-centric stocks or ETFs. You can invest in your chosen stock or ETF for just $10 without paying any trading commission.

Futures vs Options 

Another viable option to consider when learning how to trade oil is via financial derivatives such as futures or options. As mentioned earlier, futures and options are ideal for experienced traders with a greater risk appetite. Let’s look at trading oil with futures and options in a little more detail.

Trading Crude Oil Via Futures Contracts 

Futures allow you to speculate on the value of oil without actually owning the asset. Instead, you can buy or sell futures contracts based on your prediction about oil price movements. To do this, you must first determine the strike price of the oil futures markets. Next, you need to predict if the oil price will be higher or lower on or before the expiry of the futures contract.

Typically, the contract duration is three months. If you predict the price movements accurately, you make money on each contract you hold. This is based on the difference between the strike and expiry prices. That said, most oil futures markets can be exited before the contract expires, offering greater flexibility. Let’s quickly go over how oil trading via futures works.

How To Trade Brent Oil Futures 

Let’s understand how you can trade Brent oil futures with the help of an example. 

  • Let’s assume the strike price of oil is $85 per barrel. 
  • One futures contract equals 1000 barrels of oil. This means the total value of your trade is $85,000. 
  • However, to initiate the trade, you are required to put up only 5% of the contract value ($4250)
  • You believe the price of oil will be lower than $85 in three months. As such, you decide to short-sell the strike price. 
  • Days before the contract expires, you cash out your futures contract for $70. 
  • This means you made a profit of $15 per barrel for a total profit of $15,000. 

However, there are two things you must remember. Firstly, every oil futures contract consists of 1000 barrels, meaning you will be trading with significant money. Some commodity brokers have a margin requirement of 5%, while others require 10%. Either way, you will need thousands of dollars. The second point to remember is that futures can be sold at any point between their issuance and the expiry of the contract.

Trading Oil Via Options 

You can consider trading via options if you don’t want to trade oil via futures. Like futures, you are not required to own the underlying asset when trading oil options. You can also go long or short on the future price of oil. Oil options are generally considered less risky than futures. This is because you are required to pay a much smaller premium to enter a position. 

The most you can lose in oil options is the premium you have paid. Often, this premium is just 5%. On the other hand, if you speculate correctly, you can choose to buy or sell the respective options contract. Let’s understand how to trade Brent crude oil via options with the help of an example. 

How To Trade Oil Options 

  • Let’s assume you want to go long on oil options at a strike price of $85. 
  • Each options contract has 1000 barrels of oil. 
  • The options contract requires a non-refundable premium of 5% of the position size. According to the strike price, your non-refundable premium would be $4250. 
  • Let’s assume you decide to purchase 1 contract. 
  • Before the options contract expires, you decide to cash out when the price of oil hits $105. 
  • This means you make a profit of $20 per barrel and a total of $20,000. 
  • You will need to subtract the non-refundable premium from the profit. 

If the options expired under the $85 strike price, you would have chosen not to purchase the contract and lost your premium of $4250. This is why most traders favor options, as the most you can lose is the premium.

Oil Price Movements 

The price of oil is dependent on demand and supply. We’ve already talked about how oil fell below $20 during the Covid-19 pandemic. This drop was because the demand for oil was non-existent amidst pandemic-induced lockdowns and restrictions.

Oil Trading Chart

As the pandemic waned, global travel and markets opened up, demand for oil increased. As a result, oil prices were soon back to the $100 mark.

The best way to speculate on future price movements of oil is to keep track of key market developments.

Crude Oil Trading Hours 

Oil trading hours depend on the instrument you wish to gain exposure to and the market it is listed in. For example, you can invest in oil-centric stocks and ETFs listed in the US between 9:30 am and 4:30 pm, Monday through Friday. Financial derivatives such as futures and options listed in the US can be traded between 6 pm and 5 pm, Sunday through Friday.

Oil Trading Strategies 

Trading oil requires you to deploy several strategies to ensure your trades succeed. This is why you must be aware of these strategies before you begin your trading journey. This section will discuss some of the best oil trading strategies you can deploy.

Stop-Loss Orders 

Oil is a highly volatile commodity. This is why deploying stop-loss orders on all your trading positions is critical. Stop-loss, as the name suggests, caps losing trades at an amount specified by you. For example, if you don’t want to lose more than 10% of your stake in a trade, you can set this through a stop-loss order. Once executed, the broker will close your position if the value of your trade reduces by 10%.

Listen To OPEC

OPEC stands for the Organization of the Petroleum Exporting Countries. The primary goal of this organization is to enable greater cooperation between leading oil-producing nations. As such, its importance cannot be understated. This is why, when OPEC speaks, traders are all ears, and so should you.

If you want to be serious about trading oil, keeping track of OPEC statements is imperative. You must also take every opportunity to tune into OPEC meetings and keep yourself informed of key decisions. It would help if you watched out for announcements that could alter oil production output. Such an announcement would directly impact the price of oil.

Bankroll Management 

Bankroll management is a risk-averse strategy that can be deployed when trading oil. The strategy entails limiting the amount of capital risked on trades relative to your current account balance. Let’s assume you have a bankroll of $2000 and want to limit your maximum trade size to 5% of this. Following this strategy, you must avoid risking more than $100 on a single trade.

Bankroll management ensures that you do not burn through your trading capital. As your balance increases, you can increase your trade size. However, it is imperative to stick to your strategy, no matter your bankroll.

Day Trading 

Day trading is another excellent strategy that can be adopted for oil trading. Most speculators and short-term traders opt for day trading. This is because the volatility of oil is ideal for short-term positions. For example, you can open a position at 10 am and close the position at 1 pm, with decent gains of 2-3%. US-based traders can opt for futures and options for day trading. Meanwhile, those based outside the US can opt for CFDs.

Keep Up With The News 

The best and most underrated way to predict which way the price of oil will move is to simply read the news. When saying this, we specifically mean financial news. Look for stories and developments that could impact oil prices directly or indirectly. It would be helpful to set an alert for whenever a relevant story related to the oil market breaks.

How To Trade Oil – Full Steps Guide 

This section will look at how you can create an account and start trading oil. To begin trading, you need to select an online broker that allows you to trade oil. For our walkthrough, we have chosen to use eToro as an example.

eToro is also our choice for the best platform to trade oil in the US. The platform offers commission-free oil-centric stocks and ETFs. For its non-US clients, the platform offers CFDs as well. All you need to do to begin trading on eToro is to follow the steps below.

Step 1: Open An Account on eToro 

Sign up via etoro

The first thing you must do before trading oil is to create an account on eToro. It only takes a few minutes. All you need to do is enter the relevant information, such as your first name, last name, email address, and phone number. You will also need to create a strong password to secure your account.

eToro will also need government-issued documentation to verify your identity and complete KYC requirements. To complete KYC requirements, you can submit documents like your driver’s license, passport, or any other government-issued document.

Your capital is at risk. 68% of retail investor accounts lose money when trading CFDs with this provider.

Step 2 – Deposit Funds

Deposit funds on eToro

Once you have created your eToro account, the next step is to make a deposit in your account. eToro supports a plethora of deposit methods. These include debit and credit cards, PayPal, Skrill, bank wire transfers, and ACH transfers.

Additionally, the platform does not charge any deposits made using USD. Deposits made in other currencies attract a 0.5% FX fee. The minimum deposit also varies for US and non-US clients. US-based clients must make a minimum deposit of $10, while other nationalities must make a minimum deposit of $50.

Step 3 – Search For Oil Market

Once you have deposited funds into your account, you must search for the market you wish to trade in. You can search for the relevant market using the search bar at the top of the page. In the example below, we are searching for ConocoPhillips. ConocoPhillips is a top-rated stock that gives you indirect exposure to oil markets and prices. Additionally, you can discover additional oil markets supported by eToro by using the ‘Discover’ function.

Step 4: Place Your Oil Trading Order 

Buy Oil contracts via eToro

To place your oil trading order, click the ‘Trade’ button. You will be prompted to specify your total stake. For our example, we are risking the minimum amount on the trade, $10. While placing your trade, you should also consider setting up a stop-loss order. Once done, you can place your trade by clicking on ‘Open Trade.’

Is Oil Trading Safe? 

Oil trading is safe, but only as long as you are registered with a regulated broker. Our preferred platform, eToro, is regulated by several regulatory bodies. These are the FCA, ASIC, and the CySEC. Regulated by the relevant regulatory bodies ensures that the broker meets all guidelines regarding investor protection.

Beginners must also remember a few things when trading oil. Oil is a highly volatile asset. An inaccurate prediction could end up with you making significant losses in trading. Additionally, settling trade futures in physical barrels of oil also presents considerable risks. If you still hold oil futures after expiry, you will be legally obligated to take delivery of the assets.

This is why we recommend beginners start with oil CFD trading instead of futures and options

Conclusion – How To Trade Oil 2024

Learning how to trade oil is difficult, but it doesn’t have to be. Beginners wishing to trade oil will be entering a highly volatile marketplace. However, volatility is ideal for short-term and day traders, who can speculate on oil markets and make profits. When entering the oil markets, you need to consider what type of oil markets interest you. There are several you can choose from, such as futures, options, CFDs, and ETFs.

If you want to start trading oil today, check out our section on opening an account with eToro and get started. eToro offers low fees and account minimums. The platform also accepts various payment methods, such as debit and credit cards, e-wallets, and bank transfers.

And that concludes our guide on how to trade oil. Do go through the entire guide before you begin trading oil. We hope you find it helpful.

Author Checked Reviewed and Fact Checked by Wajeeh Khan, Fintech, Blockchain Writer and Investment Analyst.

eToro Broker

  • Free Copy Trading of Professional Traders
  • Best Place to Trade Oil
  • Minimum Deposit only $10
  • Best Beginner exchange
9.9

5 Stars

CFD Service. Your capital is at risk

FAQs 

What Is The Best Time To Trade In Oil?

The best time to trade oil is when OPEC makes a major announcement. The announcement could impact the demand or supply of the commodity.

Crude oil futures can be bought through commodity brokers such as TD Ameritrade and Interactive Brokers. You can also trade oil CFDs on eToro. However, remember that trading CFDs in the US is prohibited.

Our research found that eToro is the best platform to trade oil. The platform offers users access to thousands of markets at industry-leading fees. eToro is ideal for traders accessing the oil markets for the very first time. Additionally, it also offers traders the best app to trade oil.

Oil can be traded almost 24 hours a day, five days a week. However, this is dependent on the type of market chosen by you.

Oil can be traded through CFDs in four ways. These are futures, options, spot prices, and oil-linked ETFs.

The best time to trade oil is when the markets are highly active. Oil markets are typically very active thanks to the asset’s popularity and volatility. Typically, activity picks up when the related exchanges first open, and just before they close.

Yes, buying and selling crude oil is possible without taking physical delivery of the asset. This can be done through several investment vehicles. These include options, futures, stocks, and ETFs.

To trade oil, you must take a position on whether oil futures contracts will rise or fall in value. Oil futures contracts are contracts that allow traders to agree to exchange a set amount of oil at a particular price and date. They are also widely regarded as the most popular method to buy and sell oil.