TRADING 📈 OIL MARKETS

Historically, crude oil prices have ranged widely between 30 and 150 U.S. dollars per barrel. The high leverage applied in derivative markets may partially explain the excessive short-term price swings.

Demand/Supply Highlights

• More than 1 million WTI contracts are traded daily on CME Group, with over 4 million contracts open at any time. This creates significant price pressure that is mostly separate from the actual physical demand for oil.

• OECD oil consumption is falling by 1.2% per year, while Asia—especially India—is driving 75% of global demand growth (India’s demand is increasing by 500,000 barrels per day each year).

• Key oil producers in 2025 are OPEC+ with 43%, the USA with 13%, and Russia with 11% of global oil production. Saudi Aramco is the world’s top producer, with 9.7 million barrels per day—making up 9.7% of total oil production.

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📅 Crude Oil Yearly Pattern

As shown in the following chart, the first half of the year tends to be bullish for crude oil, while the second half is generally bearish. February, April, May, and June are statistically strong months, whereas October and November are typically weak.

Chart: Crude Oil Yearly Pattern (2000-2025)

📄 Research: Giorgos Protonotarios for TradingCenter.org

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🛢️ Insights into the Oil Market

Here is some basic information.

International Oil Types

There are more than 160 different types of oil worldwide, each with different qualities and prices. Internationally, two major types dominate trading:

(1) Brent

Brent is a blend of 15 different oils. It is considered high-quality and is mainly used to produce gasoline. Historically, Brent trades at a premium of about $4 to $5 per barrel compared to the OPEC Basket price (the OPEC Basket is explained later).

(2) West Texas Intermediate (WTI)

WTI is also high-quality and primarily used for gasoline production. Historically, WTI trades at a premium of about $1 to $2 per barrel compared to Brent, and $5 to $7 per barrel compared to the OPEC Basket.

Additionally:

(3) OPEC Basket: The weighted average of 13 OPEC crudes, which are heavier/sour

(4) Dubai/Oman: The Asian benchmark for medium-sour crude oil

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Factors Affecting Crude Oil Prices

As mentioned earlier, the futures market plays a major role in energy prices. Here are some key factors that influence crude oil prices:

• Global growth rates ➡️ About 1% global GDP growth equals roughly 0.8% growth in oil demand

• Other macroeconomic or political factors affecting future oil demand

• Geopolitical events (for example, escalation of the Israel-Iran conflict)

• Supply shocks caused by unexpected events (such as weather or accidents)

• New OPEC policies on supply limits (OPEC+ controls 43% of global oil production)

• Forced liquidations in the futures market (like those seen in May 2020 during the coronavirus crisis)

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How the Price of Oil is Determined

There are three main ways to determine the price of oil: a) the NYMEX price, b) the OPEC Basket price, and c) the U.S. Imported Refiner Acquisition Cost.

1. NYMEX Futures Price

NYMEX crude oil futures began trading in 1983. The NYMEX price is the most important and widely used global benchmark for oil prices. It represents the price of a barrel of oil to be bought in the future. NYMEX futures, as derivatives, allow investors to bet on both price increases (long) and decreases (short).

2. The OPEC Price (OPEC Basket)

OPEC calculates the Basket Price by collecting oil prices from seven oil-producing countries (Saudi Arabia, Dubai, Venezuela, Mexico, Algeria, Indonesia, and Nigeria). This price reflects international market conditions.

3. Imported Refiner Acquisition Cost (IRAC)

The IRAC price is mainly used in the U.S. It is based on the volume of oil imported into the country. 

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🌏 Largest Oil-Producing Countries & Oil Reserves

The table below shows the world’s largest oil-producing countries along with their oil reserves.

Table: The world’s largest oil-producing countries and their reserves

RANK	COUNTRIES		OIL PRODUCTION	PROVEN OIL RESERVES
	COUNTRY	OPEC	(million barrels per day)	(million barrels)	% of World Reserves
1	UNITED STATES		13.26	50,000	3.20%
2	RUSSIA		10.17	80,000	5.10%
3	SAUDI ARABIA	√	8.95	260,000	16.56%
4	CANADA		4.99	170.500	10.86%
5	IRAQ	√	4.38	145,000	9.24%
6	CHINA		4.17	26,022	1.66%
7	IRAN	√	4.08	210,000	13.37%
8	BRAZIL		3.59	12,715	0.81%
9	UNITED ARAB EMIRATES	√	3.30	100,00	6.37%
10	KUWAIT	√	2.64	101,500	6.46%
11	MEXICO		1.90	5,800	0.37%
12	KAZAKHSTAN		1.89	30,000	1.91%
13	NORWAY		1.89	8,120	0.52%
14	NIGERIA	√	1.57	37,000	2.36%
15	QATAR		1.32	25,250	1.60%

👉 Important Notes:

• As of August 2024
• Venezuela holds the largest oil reserves worldwide (303.8 billion barrels)
• Libya holds oil reserves of approximately 50 billion barrels
• The global crude oil reserves account for about 1,570 billion barrels

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🔄 Alternative Methods to Trade Oil Price Fluctuations

Here are some popular ways to trade oil price changes:

Oil platforms play a key role (but can also be risky) in maintaining future oil supply.

(1) Buy Shares of Oil Companies

Most major oil stocks trade on U.S. and European exchanges. Historically, oil companies pay high dividends, and their shares tend to be reasonably priced, avoiding the extreme swings of the NYMEX oil price.

(2) Gain Exposure by Purchasing a Futures Contract

Through derivative markets like the Chicago Mercantile Exchange, you can buy futures contracts to bet on rising prices (long position) or falling prices (short position). A typical futures contract represents 1,000 barrels of oil.

You can also trade using CFD contracts as an alternative. 🔗 More: » Compare CFD Brokers

(3) Buy an Oil Mutual Fund 🔗 More: Investing in Hedge Funds

Around the world, many mutual funds invest only in oil. For example, the Vanguard mutual fund and the USA mutual fund. Keep in mind, the annual management fee for a mutual fund is usually about 0.8% to 1% of the portfolio’s total value. Before buying, research how well the fund’s management has performed in the past. 🔗 More: » T. Rowe Price

(4) Buy an Oil-Stock ETF (Exchange-Traded Fund)

An Oil ETF holds a basket of oil stocks, similar to a mutual fund. The difference is that ETFs trade like regular stock shares, making it easy for investors to buy and sell quickly. This is especially helpful for short-term traders. Oil ETFs combine the risk diversification of mutual funds with the ease of trading stock shares. Some popular Oil ETFs are:

• United States Oil Fund (USO)

• Goldman Sachs Crude Oil Total Return ETN (OIL)

• PowerShares DB Oil Fund (DBO)

📌 Tip: Investing in an ETF is the safest and most reliable way to benefit from oil market fluctuations.

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⚖️ Comparing Top Oil Trading Brokers

A simple comparison of CFD brokers that offer oil trading.

Table: Compare Oil Trading

CFD BROKERS
□ ENERGY ASSETS	BRENT WTI Natural gas, ethanol, and other energy assets	BRENT WTI CRUDE OIL FUTURES	XTI/USD (West Texas Intermediate Crude or US Oil) XBR/USD (Brent Crude or UK Oil) XNGUSD (Natural Gas)	BRENT WTI CRUDE OIL FUTURES
□ CRUDE OIL CONTRACT	Account type: Pro, ECN, Prime, R StocksTrader Size of 1 lot: 1,000 barrels Minimum contract size (lot): 0.01	The typical floating spread is approximately 0.03 Contract size: 100	Up to 500:1 leverage Competitive Spreads	The typical floating spread is approximately 0.03 Contract size: 100
□ TRADE PLATFORMS	MT4/MT5 RStocks Trader	MT4/MT5 Ctrader	MT4/MT5	MT4/MT5 Ctrader
□ TRADING ACCOUNTS	Min. Deposit: 200 USD Cards | Bank Wire | Skrill PerfectMoney | Neteller » Review RoboForex	Min. Deposit: 200 USD Credit Cards | Bank Wire Skrill | PayPal | Neteller » IC Markets Review	Min. Deposit: 200 USD Credit Cards | Bank Wire Skrill | UnionPay | Neteller » TitanFx Review	Min. Deposit: 200 USD Credit Cards | Bank Wire Skrill | PayPal | Neteller » Review IC Trading
□ MORE INFORMATION	» RoboForex Website	No Europeans: » IC Markets Website	» TitanFx Accounts	» IC Trading Website

 

🔗 Sources/Links:

► Eia.gov/energyexplained/oil-and-petroleum-products

► Globalfirepower.com/proven-oil-reserves-by-country

► Statista.com

► U.S. Commodity Futures Trading Commission (Oil Futures Statistics and Information)

  

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