Oil futures trading is a fast-paced, potentially lucrative form of investment. It requires a significant time commitment and specialized knowledge, but can provide eye-opening returns for the dedicated trader. Traders can choose from a range of trading options, including CFDs and spread bets, which offer a cheaper entry point to the market with less capital required.More info :theinvestorscentre.co.uk

When traders purchase oil futures contracts they are agreeing to buy or sell a set number of barrels at a specific price in the future. The contract size varies depending on the type of contract traded. The standard WTI contract, which trades under the symbol CL, represents 1000 barrels, while the E-Mini contract represents half that amount. Because it is impractical for most traders to take physical delivery of that many barrels, oil futures are settled financially at their expiration date with a debit or credit in the trader’s account.

How to Diversify Your Portfolio with Oil Futures

The supply and demand for crude oil drives prices, but other factors also influence the markets, such as political instability in the Middle East or fears of a shortage of production. The market is highly volatile and moves rapidly at the slightest hint of news, presenting plenty of opportunities for day traders to profit from sudden movements in prices.

Investors, hedge funds and money managers who don’t have direct commercial interests in the commodity are also active participants in the oil market as a way to diversify their portfolios or to hedge inflation risk. In addition, oil prices can have a large impact on forex, as the commodity is a major export for several countries and an important import for most others.