Crude Oil Futures Trading
Oil is going to be the most important commodity for the global economy for many years to come. You must have understood the importance of oil to the global economy by the way the global financial markets react to the news of any possibility of disruption in the global oil supply.Learn Commodity Trading. Trade Dow Futures. Try these cash printing Forex Signals from heaven.
Now when we talk of oil, we are infact talking of energy. Energy and oil are two terms that are used interchangeably. Trading in energy futures is centralized at New York Mercantile Exchange (NYMEX). NYMEX is the world’s largest physical commodity exchange. NYMEX trades futures and options contracts for crude oil, heating oil, natural gas, propane, coal, electricity, gasoline and metals.
NYMEX has two divisions for trading: 1) The NYMEX Division and 2) The COMEX Division. For small traders there is an E-mini futures contract for crude oil and natural gas that trades also on the Chicago Mercantile Exchange’s (CME) Globex network. So even as a small trader, you can trade crude oil futures contracts. Crude oil trading is highly profitable if done correctly after getting good training.
Now when you trade the oil markets, you must have a good understanding of the supply and demand of crude oil. Demand can be limitless but supply is always finite. Oil production in some OPEC oil producing countries like Venezeula, Iran and Nigeria has already peaked. Similarly in Non-OPEC North Sea and Mexico, oil production is about to peak.
There is a theory that says that oil production is going to peak in coming 10-15 years after that the supply will decrease and the demand is going to rise more and more. As a trader trading the crude oil markets, you need to be aware of these facts and your primary goal should be to correlate the effect of events on the global supply of oil with your charts. Any fluctuation can make you a windfall gain.
Trading crude oil futures is one of the ways that you can trade the global oil markets. Oil is one of the most heavily traded commodities in the world. Daily billions of dollars worth of oil gets traded across the world. Want to join the action and trade crude oil futures contracts? If so than read on…
New York Mercantile Exchange (NYMEX) is the hub of global energy trading including crude oil. Trading at NYMEX comprises the futures contracts on Dubai Crude Oil, Brent North Sea Crude Oil as well as oil options. The NYMEX futures contract on the light sweet crude oil is the most liquid of all the crude oil contracts.
A standard contract is based on 1,000 barrels of oil that is supposed to be delivered to Cushing Oklahoma physically at the expiry of the contract if not settled earlier in cash. Now as a small investor, you can trade the E-mini futures contract that is based on 5,000 barrels. The E-Mini contract trades at the Chicago Mercantile Exchange (CME) on its GLOBEX electronic platform and is cleared at NYMEX.
A barrel of oil contains 42 US gallons and is traded in US Dollars. Now trading at NYMEX during the regular trading hours from 10:00 AM EST to 2:30 PM EST is through the open outcry method. After hours trading starts from 3:15 PM EST and ends the following day at 9:30 AM EST Monday through Thursday. After hour trading takes place on the electronic NYMEX ACCESS system, an internet based trading platform.
As an oil market trader, you must become familiar with the daily global supply and demand situation as global geopolitical breaking news has a significant impact on the daily prices of oil. You must know this fact however that if you can ride the trend in the oil market from its early stage to its end just before it reverses, you can make quite a handsome profit.
Trends in oil market don’t develop suddenly and don’t reverse suddenly. It means if you are watching the oil market closely, you must be able to spot a trend forming and enter it at the right time. A trend in the oil market can last from a few months to a year!
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