Oil trading

See how crude oil’s performing now, and learn what drives oil price movement to help you predict where it’s headed next.

Why is oil trading popular?

There’s a reason why traders refer to oil as ‘black gold’. It’s one of the world’s most valuable resources, and despite the rise of renewables the global economy is still reliant on crude oil to function.

As a finite resource, oil bulls believe that the price of crude can only increase in the future – but if past performance is anything to go on, there’ll be plenty of volatility along the way. That makes oil a fascinating market to follow.

Why trade oil with IG?

  • Low spreads

    Trade Brent and US Crude from just 2.8 points on our non-expiry contracts, plus Natural Gas from just 3 points

  • Range of markets

    Trade CFDs on US Crude, Brent Crude, Heating Oil, London Gas Oil, Natural Gas and No Lead Gasoline

  • Expert analysis

    Access breaking industry news, commentary and insight from our team of market experts

Live oil prices

Markets Bid Offer Updated Change
Brent Crude
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US Light Crude
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Natural Gas
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Prices above are subject to our website terms and conditions. Prices are indicative only.

Our oil spreads

Market

Spread

Oil - US Crude 2.8
Oil - Brent Crude 2.8
Natural Gas 3
Heating Oil 20
No Lead Gasoline 30
London Gas Oil 1


These are our spreads for undated commodities. For futures spreads, and further detail, see all product details.

What moves crude oil?

Like any financial market, the single biggest factor governing the price of crude oil is the relationship between supply and demand.

Oil has a huge number of uses around the world – chiefly fuelling transport, but also in the creation of plastics, pharmaceuticals and more. So if the world economy is performing well and industry is booming, then more oil will be needed. If supply doesn’t rise to match the increased need, its price will go up.

But the inverse is also true. For example, during a period of recession, the global economy’s need for oil tends to drop. If supply carries on at pre-recession levels, then prices will go down as supply outpaces demand.

Assessing oil supply vs demand

At the turn of the century, the oil markets were fairly easy to analyse. The US was by far the biggest driver of demand, and OPEC was its biggest supplier. Over the years, though, the picture has become muddled – improvements in oil drilling technology have widened supply, alternatives have arisen, and China has become a major oil consumer.

Here are a few of the biggest influencers of oil supply and demand today.

Factors affecting oil supply

OPEC

Each month, the Organization of the Petroleum Exporting Countries (OPEC) releases a report on how much oil its members are producing. Those 14 countries produced over 40% of the world’s oil in 2016, so the report can be a useful gauge of global crude supply.

But far more important are OPEC’s meetings, where future production and supply levels are discussed. If all of OPEC’s members can agree on these levels, then they can have a big sway over oil prices.

But the geopolitical landscape can make consensus hard to achieve – like in 2014, when OPEC nations refused to agree on a production freeze to counteract China’s slowing growth and the rise of US shale. Supply outstripped demand, and prices tumbled.

Non-OPEC nations

For many years, the three biggest oil producers have been Russia, Saudi Arabia, and the US.

Only one of those countries – Saudi Arabia – is an OPEC member, and the role of Russia and the US in setting oil prices shouldn’t be underestimated. However, without a unified report to go on, keeping a close eye on production levels outside of OPEC can be difficult.

Supply shocks

Much of the world’s oil is produced in the Middle East, which can mean that conflict and terrorism impacts oil prices. Like in the 2000s, when the Iraq war led to a major supply deficit.

Elsewhere, weather can also have an effect. Hurricane Katrina, for example, saw oil prices rise after a major pipeline was destroyed.

Factors affecting oil demand

US oil data

The importance of the US’s oil appetite has dimmed somewhat in recent years. It was Chinese economic growth that led to oil’s recovery after the 2008 recession, for instance, instead of American need.

But the US is still the world’s biggest oil consumer, and the Energy Information Administration’s crude oil inventories are a strong signifier of where demand is headed.

Global economic data

China may have risen to become the second biggest oil consumer in world, but it doesn’t provide reliable statistics on its oil consumption.

Instead, oil traders can examine economic releases which give a broader indication of Chinese growth, and predict underlying demand accordingly. 

Alternative resources

As technology improves, the world’s reliance on oil lessens and alternatives become more viable.

The rise of renewables should lower demand for oil. But whether that is enough to counteract the growing scarcity of crude remains to be seen.

The price of the US dollar

Commodities are generally priced in dollars, which means that oil prices can be heavily influenced by the price of US currency.

If the dollar is weak, then oil becomes a much more attractive investment and demand increases. Without a corresponding rise in supply, oil prices go up.

 

Brent crude vs WTI

Brent crude and West Texas intermediate (WTI) are two of the most popular oil benchmarks on the market. Often, if you see a reference to the oil price, it’ll actually be the price of one of these two markets.

  • Brent crude refers to oil that is drilled out of the North Sea: mostly from the Brent, Osberg, Forties or Ekofisk fields.
  • West Texas refers to oil that is produced in North America. Of the major oil benchmarks, WTI is the highest quality. On the IG Trading platform, WTI is referred to as US Light Crude.

Learn more about how to trade oil.

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FAQs

What is crude oil?

Crude oil is a form of petroleum that can be refined into various products to power the global economy. While you’ll often hear one price quoted for oil, there are actually lots of different types.

The different oil types are referred to as benchmarks, and all signify a specific drilling location and quality of product. The highest quality of oil tends to be low in sulphur (referred to as ‘sweet’ by oil traders) and low in density (referred to as ‘light’).  The three major benchmarks are Brent crude, WTI, and Dubai/Oman.

In addition to crude oil, you can also trade markets like natural gas, or heating oil.

Can I trade oil with CFDs?

Yes. Buying or selling a single oil CFD is the equivalent of trading a single oil future. Buying a Brent crude CFD, for instance, is the same as buying 1000 barrels in the underlying market.

You can trade in fractions of a contract to limit your exposure, and speculate on both rising and falling markets. Find out more about CFD trading.

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