
Trading Crude Oil Futures Contracts
If you are looking to trade crude oil then some of the most important data that affects both the US Crude Oil and UK Brent Crude Oil markets are the weekly inventories.
Every week US Oil inventories are released at 15.30 BST and the market often turns into a rollercoaster both before and after the data is released.
If you had been looking at the numbers recently you would have noticed that US Crude has broken through the $84 per barrel marker. In the futures markets it looked like traders hunted down weak short positions until there were none left.
Crude oil is now at its highest level since September 2008. We can certainly expect higher prices in the garages again.
The breaking effect of higher energy costs has not been factored in very much to growth prospects. However the implications for European and US growth are not exactly wonderful. On top of weakened bank lending capacity, higher personal taxation and impending public sector spending cuts we now also have oil climbing inexorably higher.
The UK is very dependent on the mobility of its workforce and commercial fleets. Every squeeze on the price of delivering this will impact growth further down the line.
The $82/84 resistance level for Crude Oil had stood firm for quite some time. At the moment we are grinding steadily higher. If that continues then there may be something of a scramble for commercial consumers to cover their forward risks, ie airlines, haulage etc. We may see prices accelerating higher in the short term.
This said inventories are still looking good. If demand does increase then the supply part of the equation will hopefully give us some leeway.
If you are looking to speculate on the crude oil markets then spread betting offers quick and simple access to both the US Crude Oil and UK Crude Oil (Brent) markets.
Being able to ‘short’ a market provides obvious opportunities. You do not have to speculate on markets to go up. If your analysis suggests that the US Oil market will go down you can speculate on it to go down. If your research indicates that the price of Brent Crude Oil will go up you can spread bet on it to go up.
Also note that spread betting is tax free. Trading profits do not incur stamp duty or capital gains tax*.
So where to trade? The Financial Services Authority regulates the spread betting companies based in the UK.
Note that a number of firms offer the usual benefits of letting you trade outside market hours. Some offer trades on thousands of global markets. Some companies, like InterTrader will also let you trade markets such as the Ftse 100, DAX 30, Crude Oil and Gold from Sunday evening all the way through to Friday evening. Genuine 24 hour trading.
Please note though, with spread betting you can lose more than your initial investment. Before trading, ensure that spread betting matches your investment objectives. Spread bets carry a high level of risk to your capital. Familiarise yourself with the risks involved. Seek independent advice if necessary.
* Based on current UK and Irish tax law. Tax laws may vary if you live outside of the UK or Ireland.
About the Author
A leading financial author based in the heart of London’s Canary Wharf. Thomas Bainbridge is a respected commentator on the crude oil spread betting markets.
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