Oil is a highly volatile commodity that is traded both physically and via derivatives. The price of crude oil is a key component of the prices of many other products, including petrol/gas, plastics, and even medicines. Oil futures trading offers longer trending movements compared to most other commodities and is mostly used for speculation rather than for delivery. Traders may purchase crude oil futures contracts through a broker or directly on the commodities exchange. Investing in oil futures requires a specialized account that will only be offered by brokers who specialize in this space, so you should always check the brokerage’s credentials against the SEC and FINRA records before opening an account.Find out :theinvestorscentre.co.uk

How to Analyze Oil Futures Market Trends Like a Pro

In a typical futures contract, investors agree to buy or sell a specified amount of oil on a future date for a fixed price. At expiry, the contract can be settled – physically or financially – or rolled over to the next term. Physical participants (oil producers, processors, merchants, or end users) trade crude oil futures to hedge their physical exposure to price fluctuations. Money managers, large financial institutions, and swap dealers also participate in the market, though on a smaller scale.

Investing directly in oil futures can be complex as it requires extensive operational know-how and expensive infrastructure. The best way to gain direct exposure to crude oil prices is by investing in an ETP that tracks a total return index underpinned by oil futures.