The two most popular crude oil future contracts are Brent Crude futures, traded on the ICE Futures Exchange in London, and US West Texas Intermediate (WTI) which trades out of the New York Mercantile Exchange (NYMEX ). As these are slightly different grades of crude oil, the prices differ slightly on a day to day basis. Oil futures are a contractor agreement to buy or sell crude oil at a future date, or settle for the differential between spot and future price in cash at the end of a fixed period (usually regular contract months). Traders make a profit or loss on each trade based on the difference between the price they buy each contract and the price they sell it at.
Crude oil is one of the most popular commodities of choice for traders around the world. It is a deeply liquid, globally-active market and often shows price volaitility driven by day-to-day economic or political news events. This presents many good trading opportunities, for both intra-day trading orlong-term investment. Crude oil’s volatile price movements also provides plenty of trading opportunities for chartists or technical analyst. To calculate your profit or loss on each contract, you’ll first need to know the tick value of the contract you're trading. For a standard crude oil contract the tick value is $10. This is because the contract represents 1,000 barrels of oil, and 1,000 barrels multiplied by the $0.01 tick size results in $10. That means for each contract, a one tick movement will result in a profit or loss of $10. If it moves 10 ticks, you win or lose $100. If it moves up by 10 ticks and you're holding long 3 contracts, your profit is $300. Note that crude oil can move several dollars a day easily (hundreds of ticks). All of this potential loss/gain can be easily accessed viathe United Global Assets trading platform on either your PC or Mobile devices.
Factors Influencing Oil Price
Oil price, similar to other commodity price movements depends primarily on Supply and Demand. In addition to how much oil is being pumped out of the ground, global economic indicators and, geopolitical events such as rising tensions in oil producting regions like the Middle East also drive oil prices on a regular basis. As economies slow and demand drops, the price of oil and other commodities also tends to fall accordingly. In early 2016, oil producing countries were over-supplying crude oil and as a result, rising storage inventories and fear of China’s impending economic slowdown and subsequent fall in oil demand caused oil to trade below $30 USD a barrel. Other factors influencing oil prices include decisions by the Organisation of Petroleum Exporting Countries (OPEC) and other major oil producing nations on how much oil is produced and supplied to global markets.