Oil trading

Oil trading  

Oil contracts   trade like currency pairs, though with different margin and leverage. One oil contract represents 100 barrels (bbls) of oil, priced in US dollars.

Oil contracts are 'Contracts for Difference' (CFDs), which are over-the-counter trading instruments with an expiry date that are cash settled. 

Types of oil 

FOREX  offers clients 2 oil contracts – UK Oil, also known as Brent Crude (UKOIL) and US Oil, also known as West Texas Intermediate (USOIL). Crude oils are classified as either Light or Heavy depending on their API gravity, and as either Sweet or Sour, depending on their sulphur content. Brent Crude, or UK Oil is a "light, sweet" blend, gathered from several oil fields in the North Sea, which is where the name 'Brent' comes from. It is typically priced higher than the OPEC composite price. West Texas Intermediate (WTI), or US Oil is a "lighter, sweeter" blend, and is typically priced higher than Brent. (Source: The Energy Information Administration)

Trading hours 

Trading hours are the same for all oil products: Sunday 20:00 EST (01:00 GMT) until 17:00 EST (22:00 GMT) Friday.

There is a daily break in trading from 18:00 EST (23:00 UK time) until 20:00 EST (01:00 GMT).

On the monthly expiration date, trading in the contract will expire at 14:30 EST (19:00 GMT) -   

Who trades Oil, and why? 

Trading in petroleum products spans many industries, and as such, is affected by both high-level geopolitical factors, as well as the trading activities of speculators. Players in the global oil trade range from entire economies, to large corporations, to traders on exchanges, down to the average daily consumption of gasoline in your car. Airlines may use oil trading to protect against an anticipated price increase, and Wall Street traders may trade oil futures to attempt to profit from market movements. The factors that may influence the price of oil are similar to that of a currency pair, in that they are affected by market-forces. These can be political, financial, or even weather-related.

How is the FOREX  oil price derived? 

FOREX 's prices for UKOIL and USOIL are derived from the prices of futures trading on the Intercontinental Exchange (ICE).

Our price is derived from the current (front month) price of the ICE contract up to the 2nd Wednesday of each month, Between that date and the expiry date of the ICE contract, the FOREX.com oil contracts will be priced from the next futures contract month to avoid expiry-related volatility.