How to trade oil: All 4 channels covered for traders in 2025

Crude oil is a commodity that attracts the attention of investors worldwide. Due to changes in supply and demand, it offers good trading opportunities. There are various methods to trade oil, depending on your factors and potential.

Understanding Oil Trading

Trading oil is a high-profit potential investment strategy. Crude oil is the most traded commodity in the global market and is highly volatile, which is advantageous for those looking to profit from price fluctuations.

Major Oil Markets: Brent and WTI

The oil market has two main benchmarks: Brent crude oil (Brent) and West Texas Intermediate crude oil (WTI).

Brent Crude Oil (Brent):

• Extracted from oil fields in the North Sea of Europe
• The global price standard, used in Europe, Africa, and Asia
• Low sulfur content (about 0.37%)
• Traded on ICE (Intercontinental Exchange)

WTI Crude Oil:

• Produced from major U.S. oil fields such as Texas and Louisiana
• The price standard for North America
• Has lower sulfur content than Brent (about 0.24%)
• Traded on NYMEX (CME Group’s exchange)

4 Ways to Trade Oil

1. Physical Oil Trading

This method involves purchasing large quantities of oil and storing it for sale. The minimum requirement is 1 contract = 1,000 barrels.

Advantages:

• Ownership of tangible assets
• Can be used as an inflation hedge
• Stable global demand

Disadvantages:

• Very high storage costs
• Requires registration and licensing
• Complex transportation and logistics

Suitable for: Large companies that use oil for actual operations, such as refineries and industrial plants.

2. Futures Trading (Futures)

This involves buying contracts to receive oil in the future, with a predetermined expiration date.

Key contracts:

• WTI Futures (CL): Contract size 1,000 barrels, traded on NYMEX
• Brent Futures (BRN): Contract size 1,000 barrels, traded on ICE

Advantages:

• Use leverage to control large volumes with less capital
• High liquidity, quick trading
• Effective risk hedging

Disadvantages:

• Contracts have expiration dates that require management
• High risk due to leverage

Suitable for: Experienced traders who understand leverage and have medium to high capital.

3. Investing in Oil Stocks

Trading shares of companies involved in oil, such as exploration and refining companies.

Examples of companies:

• Thailand: PTT Public Company Limited (PTT), PTTEP (PTTEP)
• USA: ConocoPhillips (COP), Occidental Petroleum (OXY)

Advantages:

• Receive continuous dividend income
• Potential for capital appreciation when oil prices rise
• Easy to trade via stock exchanges

Disadvantages:

• Stocks may not track oil prices directly
• Affected by company-specific factors

Suitable for: Retail investors with limited funds seeking easy trading and dividend income.

( 4. Trading via CFDs )Contracts for Difference(

This method does not require owning actual oil but involves speculating on price changes.

Popular CFD contracts:

• USOIL: WTI crude oil
• UKOIL: Brent crude oil

Advantages:

• High leverage, amplifying profits
• No need to own or store physical commodities
• 24/7 trading often available
• Low initial capital

Disadvantages:

• Very high risk; leverage can lead to massive losses
• Requires constant market monitoring

Suitable for: Traders with limited capital, who understand leverage, can tolerate high risk, and seek short-term speculation.

Factors Influencing Oil Prices

1. Supply and Demand When demand exceeds supply, prices tend to rise, and vice versa.

2. OPEC and OPEC+ Decisions Major representatives controlling oil production levels and influencing prices.

3. Geopolitical Conflicts Wars, political instability, sanctions in major oil-producing regions.

4. Economic Events Inflation rates, interest rates, GDP growth, currency volatility.

5. Inventories and Storage Levels Especially in the U.S., significantly impacting prices.

6. Weather Conditions Hurricanes, storms, cold weather can disrupt production and transportation.

7. Currency Fluctuations Oil is traded in USD, so exchange rates greatly affect prices.

Summary

There are various ways to trade oil, each with its advantages and disadvantages. Investors should choose based on factors such as capital, experience, and risk tolerance.

Key points:

• Select methods suitable for yourself
• Understand risks clearly
• Trade through regulated platforms
• Continuously study market factors and influences on prices

Trading oil via methods like forex or CFDs requires sufficient knowledge, risk management, and ongoing market observation to succeed.