How to trade oil online

Oil is a vital part of our day-to-day lives and the most widely traded commodity on the planet. Learn all about how to get started trading oil right here.
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Updated: Mar 4, 2022
Tip: our preferred broker is, eToro: visit & create account

Trading crude oil is the most popular way to get involved in the oil market, and this beginner-friendly guide explains how to do it. Discover all the different ways you can trade and where you can start trading now.

Compare the best platforms for trading oil

To get started with oil trading right away, use one of the brokers below. We have reviewed all the top commodity brokers to come up with a list of the best platforms, and you can be sure that any of these would make a good choice. Otherwise, keep reading to learn more about the oil market.

1
Min. Deposit
$10
Promotion
User Score
10
Trade/invest in stocks with just $10
Deposit with ACA, Wire, Pay with my bank
Invest for dividends and get payout on stocks on Ex-Dividend day
Start Trading
Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro users can connect with, learn from, and copy or get copied by other users. Buying stocks on eToro is free and you can invest with as little as $50.
Payment Methods
Bank Transfer, Wire Transfer
Full regulations list:
CySEC, FCA
Investoo Ltd is compensated if you access certain of the products or services offered by eToro USA LLC and/or eToro USA Securities Inc., as applicable. This compensation incentivizes Investoo Ltd to describe those products and services in favorable terms. Any testimonials contained in this communication may not be representative of the experience of other eToro customers and such testimonials are not guarantees of future performance or success.
2
Min. Deposit
$0
Promotion
User Score
9.3
$0 commission and $0 Options contract fees
Upgraded research with advanced charts
Smart Menus for faster trades
Start Trading
Description:
Firstrade is a leading online brokerage firm offering a full line of investment products and tools designed to help investors like you take control of your financial future. Since its founding in 1985, Firstrade has been committed to providing high value and quality services to help you reach your financial goals.
Payment Methods
Full regulations list:
3
Min. Deposit
$500
Promotion
User Score
8.7
We offer one of the best execution speeds in the industry with low latency
Award-winning support in 14 languages
Trade with precision from 0.5 pips on EURUSD
Start Trading
Description:
Founded in Switzerland, ActivTrades has been around since 2001, which means it has more than two decades of experience in the fintech industry. The independent brokerage house started as a small firm, but it is now a global retail and institutional broker. In 2005, ActivTrades moved its HQ to London, and it began growing rapidly through Europe. ActivTrades offers a lot of benefits to its clients, including educational tools, rewards programs, competitive spreads, and the use of MetaTrader 4 and MetaTrader 5, two industry-leading platforms.
Payment Methods
Bank Transfer, Bank Wire, Credit Card, Debit Card, PayPal, Sofort, neteller, skrill
Full regulations list:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

How to trade oil online – a step-by-step guide

It’s not difficult to start investing in oil even if you’re new to commodities trading. Use this step-by-step guide to grasp the basics of how to take your first steps.

  1. Find a broker. To invest in crude oil, you need a broker. There are lots of different platforms to choose from, each with slightly different features and benefits. Use our table above to help you choose one.
  2. Create an account. It only takes a few minutes to create an account but you should be prepared to provide some personal details before you can get started. The exact steps vary by platform but make sure you have a form of photo ID to hand.
  3. Deposit funds. Log into your new account to deposit funds. Most brokers accept deposits via bank transfer or credit or debit card. Some accept payment from e-wallets like PayPal but you should check with your broker before you sign up if that’s how you want to pay.
  4. Decide whether to go long or short. When you trade oil you have two basic options and you have to decide whether you think the price is going to go up (long) or down (short). Then you’re ready to trade.
  5. Execute trade. Once you’ve placed the order, your broker will execute it automatically and the trade will show up in your account.
  6. Set stops and limits (optional). Stops and limits are a way of reducing your risk by putting in orders to automatically close a position once it hits a certain level. This is often a good idea as a way to make sure you don’t lose too much if there’s a sudden market swing.

What is oil? And why does it have value?

Oil is the most widely traded commodity in the world. It’s a natural resource that’s crucial to the 21st-century economy, used in the production of plastics, textiles, and computers, and turned into the fuel that makes it possible to transport those products across the globe.

Those uses are what makes oil such a valuable commodity. Even as the world looks for ‘greener’ and more environmentally-friendly energy sources, oil is still vital to so many industries and every developed country needs lots of it to – literally – keep the lights on.

What affects the price of oil?

The biggest influences are supply, demand, and market sentiment. These can be tied together, as the expectation of supply or demand changes in the future can cause the price to shift today.

What makes oil a bit different to many markets is that ‘intangibles’ affect its price along with real-world factors. A lot of crude oil trading is based on speculation, and what the community believes is going to happen can move the price quite significantly.

That speculation is often based on oil’s unique place in global politics, where it’s often used as a bargaining chip by all sides. The USA, Russia, and China are three major oil producers, while 40% of the entire supply comes from countries known collectively as ‘OPEC,’ led by the likes of Saudia Arabia, Iraq, and Iran. Policy decisions in these countries can have big effects on the price of oil.

How has oil performed in recent years?

It’s experienced some major ups and downs in recent times. The price of Brent Crude oil is generally used as a benchmark to measure the industry’s performance, and that saw a 70% fall between 2014-2016 before rebounding. Volatility is a feature of the oil market and there have been some big swings since then as well.

The main one came in March 2020, when confidence collapsed as the coronavirus pandemic took hold. In that case, the oil price actually fell below zero for a short time, with suppliers paying people to take it off their hands. It quickly recovered, however, and within a year was back up to pre-pandemic levels. Since then, the price has gone up significantly, going above $100 in the aftermath of the Russian invasion of Ukraine in February 2022.

In general, interested parties tend to step in before things get too serious. OPEC countries, Russia, and the US can agree to cut or increase production to control price changes, although that relies on those governments working together. After Russia went into Ukraine, OPEC made little effort to counteract the supply shock, which helped send prices soaring past $100.

Should I start trading oil now?

It depends on how you expect the economy to perform in the next few months. Oil helps keep the global markets going, so its price is closely tied to overall economic performance. However, an uncertain political situation can mean a lot of volatility in the oil price and means you have to be careful, particularly if you’re a new trader.

An alternative, and safer, way to get some exposure to oil without needing to manage the day-to-day trading is by buying stocks in companies that are involved in oil production. Businesses like Shell and Glencore are a substitute to trading oil itself.

Whichever method you choose, it’s crucial to stay on top of what’s going on in the world so that you don’t miss anything that might affect the price. Our news and analysis is the easiest way to get the most up to date information on the oil market:

The crude oil price is advancing this Tuesday after the news that OPEC could allow boosting oil output slightly from May 1. The price of crude oil continues to trade above the $60 support level, but rising Covid-19 cases and new restrictive measures in some parts of the world could…
Crude oil prices opened the new week lower on renewed concerns related to supply and demand forecast.  Fundamental analysis: Uncertainty surrounding supply and demand outlook Brent crude futures and U.S. West Texas Intermediate (WTI) fell last week as investors were worried over the pandemic’s unclear impact on fuel demand and…
The global stock markets have advanced this March, Wall Street’s three main indexes continue to trade in a bull market, but the world still needs to face COVID-19 challenges. There is still a long way to fight against the pandemic; still, investors hope that a fiscal stimulus and coronavirus vaccines…

Trading oil for beginners

Before you start trading it’s a good idea to do your research, especially if you haven’t traded commodities before. That means knowing what might impact the market and all of the different ways you can trade. Keep reading for some tips for how to get going.

What to do before starting to trade

Being a successful trader doesn’t start with the act of placing a trade. You want to be prepared and set guidelines for yourself, and you can use this list to help you.

  1. Research the commodity. You need to know why oil is valuable, and anything that might affect its price. That means following the news to look out for what oil producing countries are doing, whether there are events that might affect demand, and keeping an eye out for how alternative energy sources are doing. That way, you can decide when is a good time to buy or sell.
  2. Make sure you understand the basics of commodities trading. It’s important to understand how to trade oil, which means getting to grips with futures and options trading, and knowing how the market works. Then you can work out what sort of trader you want to be.
  3. Decide between long term and short term trading. How soon do you want to see returns? If you’re looking to make a quick buck, that calls for a different approach than if you want to build your wealth over time. Generally, the shorter your time frame, the more risk you have to take on.
  4. Set a budget. Never risk more than you can afford to lose. Setting a budget in advance means you can protect yourself against damaging losses and that each trade makes up only a part of your total capital.
  5. Find a broker platform. Each broker has a different set of features. Some offer low trading fees, while others might offer more advanced features so you have more options for how to trade.

The different ways to trade oil

When it comes to commodities trading, you have a lot of different options. Which is the right one for you depends on your goals, how soon you want to see returns, and how active a trader you want to be. Read through the list below to get a grasp of all the different ways you can trade.

  • Oil spot trading. The ‘spot’ means the current price of oil. Spot trading means buying or selling at today’s price and generally this is done using CFDs, or contracts for difference. When you use a CFD you’re trying to profit from the difference in spot price between the dates when you bought and sold it.
  • Oil futures contracts. A futures contract is an agreement to buy or sell a commodity at a set date in the future, at a price agreed today. This is the most popular way of trading, because if you buy oil futures you can speculate on what the price is going to be in a few months’ time.
  • Oil options contracts. Options are similar to futures, except rather than an obligation they give you the opportunity to buy before a set date in the future. If you think the price is going to go up, you buy a ‘call’ option, if you think it’s going to do down, buy a ‘put’.
  • Oil spread betting. Spread betting is a way of predicting market moves by betting on whether it’s going to go up or down. For each point it moves in that direction, you get the value of your stake. Be warned, however, you also lose your stake for every point it goes the other way, so your losses can mount up.
  • Oil stocks. An alternative way of getting exposure to the oil market is to buy crude oil stock, which means shares in companies that are involved in production, like drilling, extracting, or refining. These are often less volatile than the oil price and require less day-to-day management.
  • Oil ETFs. An ETF is an exchange-traded fund, a portfolio of stocks from within a particular market or index that you can buy just like you would a share in an individual company. There are lots of ETFs that own stocks in companies that are involved in oil or energy production and these tend to be a safe, beginner-friendly way to get involved. 
  • Physical buying and selling. It is possible to physically own barrels of oil, although this is obviously not practical for the vast majority of traders.

If you want to learn more about any of these trading methods, our commodities courses explain them in detail. Otherwise, if you’re ready to put them into practice, sign up with a broker to start trading now.

Latest oil news

During the much-awaited OPEC+ meeting, member countries led by Saudi Arabia and Russia agreed to increase their collective output target by 100,00 bpd (barrels per day) come September. This is a drop in the proverbial ocean with producers catering to a global market of approximately 10 million bpd. A Reuters…
The OPEC+ monthly meeting is scheduled to be held on August 3. Saudi Arabia, Russia, UAE and other oil-producing nations will meet to discuss national production quotas. But don’t hold your breath. The incomplete effect of US sanctions in the aftermath of the Ukraine invasion is perhaps most evident in…
In what has become (almost) commonplace, the US CPI headed higher once again, galloping to 9.1% on an annual basis in June and registering a 41-year high. The latest inflation print outdid both May’s reading of 8.6% and the Dow Jones’ forecast of 8.8%. The much-anticipated US jobs report released…
WTI crude oil price had dropped by more than $10/barrel yesterday, falling below $100 and bringing some relief to investors scared off rising prices. Inflation is making central banks raise rates as quickly as possible, and the decline in oil prices is supposed to cool things down a bit. But…
A lot has happened in the energy markets in 2022, especially in the oil markets. WTI crude oil price surged to $130 in the second quarter of the year, after only in 2020 it had traded in negative territory. Futures contracts settle daily, and back in 2020, during the COVID-19…

Try some of our commodities trading courses for beginners


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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.