Energy CFDs –Trading Oil and other Energies

 

Trading energy assets via CFDs incurs many advantages. The four main energy assets available via CFDs include Crude Oil, Gasoline, Heating Oil and Natural Gas.

SYMBOL

UNDERLYING ENERGY ASSET

USOil

Crude Oil (WTI)

UKOil

Crude Oil (Brent)

NGAS

Natural Gas

 

Two Crude Oil Classifications

There are two main crude oil classifications:

(1) US Oil

US Oil is referred to WTI (West Texas Intermediate). The WTI is considered light. The light density along with fewer impurities makes WTI a sweet crude oil. WTI typically trades a dollar or two higher to Brent.

(2) UK Oil

UK Oil is referred to Brent Blend oil. The Brent Blend is a sweet crude oil too and which is refined in Northwest Europe. Brent is mainly used in the production of petrol.

 

Advantages when Trading Energy Assets via CFDs

There are many reasons for traders to select trading energy assets using CFD contracts:

(1) High Capital Leverage

Trades are leveraged commonly 50:1 or even more

(2) Low-Cost Trading

The spread of crude oil is very tight while by trading CFDs on Futures you may avoid paying overnight charges

(3) Advanced Trading Platforms

CFD providers offer many different trading platforms including the MT4 which provides multiple orders, advanced charting, trading-on-charts, expert advisors etc.

(4) Minimum Deposit Requirements

You may trade as little as 1 contract. Usually, the initial margin required for 1 contract of Crude Oil is just $75. Therefore you can open a decent position with as low as a couple of hundred bucks

(5) Easy-Monitoring of Prices

CFD contracts imitate the price behavior of their underlying assets. If the price of crude oil is $80 then the price of the Crude Oil CFD is $80 too. Trades can be easily monitored and placing orders become a very easy process too.

(6) Trade any Market Direction

CFD traders can go long or short on energy assets using the same trading account.

 

Factors Affecting the Price of Energy Assets

The energy market is characterized by high volatility. The price of energy assets is mainly defined by the real supply and the real demand for energy assets. When the global economy is growing fast then the demand for energy is getting stronger and the prices are moving higher. In overall, the price of energies is affected by numerous factors, including:

(1) Real demand and supply for energy

(2) Political and environmental factors

(3) Crisis or war in the major oil-exporting countries

(4) New technologies that can substitute existing energy assets

(5) The Price of US Dollar, as energy assets are priced in USD. When the USD rate goes up the energy assets priced in USD must go done to offset the differential in final value

(6) Cost of Production

Chart: Break-Even Oil Prices {OPEC countries}

Gathering Information and Reports Regarding the Energy Market

News portals such is Reuters, CNNfn and Bloomberg offer extended reports about the energy market. Oil traders can use also the American Petroleum Institute (API Report) to gather information. This report is released weekly on Wednesdays.

http://www.api.org/publications-standards-and-statistics/statistics/api-weekly-statistical-bulletin

 

Technical Analysis on Oil Prices

Technical analysis is important when trading the Oil Price. Here is what is most important:

(1) Breaking major Support and Resistance Levels is very decisive towards identifying long-term trends

(2) The RSI on the 5-Minutes chart can be used for entering/exit the market

(3) The Fibonacci Retracement is useful to determine a price correction

(4) Other technical analysis tools used by Oil Traders include CCI, MACD, Stochastics and the Bollinger Bands.

 

Comparing CFD Brokers offering Energy Trading

Here is a basic comparison between regulated CFD providers offering energy assets. All the following brokers offer also segregated client bank accounts and have been in the market for at least 5 years.

CFD PROVIDER

ASSETS

TRADING PLATFORMS

TRADING ACCOUNT

WEB-SITE

HOTFOREX

Asset Classes:

· Forex

· Commodities

· Precious Metals

· Energy

· Shares

· Indices

· US Oil

· UK Oil

■ MetaTrader4

■ WebTrader

■ Mobile Traders

SCALPING: YES

Free VPS Server for deposits of more than $5,000

$50 Minimum Deposit Amount

WELCOME BONUS:

40-100%

LEVERAGE: 

1:1000

WEB-SITE:

 

► HotForex Web

DUKASCOPY

Asset Classes:

· Forex

· Commodities

· Precious Metals

·  Energy

·  Indices

· US Oil

· UK Oil

■ Jforex Platform

■ WebTrader

■ JavaTrader

■ Mobile Traders

SCALPING: YES

 

$100 Minimum Deposit Amount

WELCOME BONUS:

10% under a policy

LEVERAGE: 

1:300

WEB-SITE:

 

► Dukascopy Europe

 

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