Oil trading is one of the favored diversification trades of Forex traders, with oil CFDs the best option.
We have evaluated the best brokers for trading crude oil to ensure you have a competitive edge from a secure and trustworthy trading environment.
Top Oil Trading Platforms
- Plus500, multi-asset and CFD broker.
- FP Markets, ECN trading with leverage up to 1:500.
- Eightcap, Competitive pricing + excellent daily videos.
- Pepperstone, Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platform.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
Plus500
In Summary multi-asset and CFD brokerPlus500 is a global CFD broker founded in 2008. It maintains an excellent regulatory environment provided by the FCA in the UK, the CySEC in Cyprus, the ASIC in Australia, the FMA in New Zealand, the FSCA in South Africa, the FSA in Seychelles, and the MAS in Singapore. Plus500 offers traders a choice of more than 2,800 assets to trade, including nearly 900 options contracts, in a commission-free trading environment. This extremely wide range of choice can make Plus500 an appropriate choice for traders looking to pursue wide diversification of assets. Plus500 is licensed to offer CFDs through ASIC (AFSL #417727), and through the FMA (FSP #486026), for licensed CFDs in New Zealand. Plus500 trading services are also available in South Africa (Authorised Financial Services Provider #47546). In addition, Plus500CY Ltd is authorized & regulated by CySEC (#250/14), while Plus500EE AS is authorised and regulated by the Estonian Financial Supervision and Resolution Authority (Licence No. 4.1-1/18).
Pros & Cons
- Broad asset selection in equities and options
- Free and unlimited demo account
- Advanced free-of-charge analytical trading tools
- Global and regulated fintech platform
- Sub-standard trading platform without support for automated or social trading
FP Markets
In Summary ECN trading with leverage up to 1:500fpmarkets is an ASIC-regulated Australian brokerage which launched in 2005. For most traders, the unique selling point of this broker is in the extremely wide range of tradable assets offered, providing the opportunity to trade over ten thousand individual stocks and shares including publicly quoted Hong Kong and Australian companies. Ffpmarkets also offers 60 Forex pairs and crosses, 11 equity indices, the major commodities, and 5 cryptocurrencies including Bitcoin. fpmarkets offers an unusual hybrid ECN/STP execution model, meaning their clients can choose between ECN style of execution giving a very high level of speed, and a “straight through processing” execution style which allows for more “natural” spreads.
Pros & Cons
- Choice of trading platforms and auxiliary trading tools
- Very competitive cost structure and excellent asset selection
- Low minimum deposit requirement and leverage of up to 1:500
- Well-regulated and trustworthy
- Availability of Iress geographically restricted
Eightcap
In Summary Competitive pricing + excellent daily videosEightcap offers crude oil CFD trading from the MT4/MT5 trading platforms. The former gets the Capitalise AI plugin, allowing algorithmic trading in a code-free environment. It creates a distinct competitive edge most crude oil brokers cannot match, which places algorithmic crude oil traders ahead of the curve. The latter receives the FlashTrader plugin, ensuring MT5 traders have an advantage. The AI-powered economic calendar provides crucial fundamental data to crude oil traders. Therefore, I rank Eightcap among the best crude oil brokers.
Social crude oil traders can connect their Eightcap account to TradingView, where 50M+ peers share and discuss trades.
Pros & Cons
- Low minimum deposit and high leverage of up to 1:500
- Competitive cost structure
- Excellent technology infrastructure and seasoned management team
- Daily research and quality educational content
- Limited leverage in some areas
Pepperstone
In Summary Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platformCrude Oil traders who prefer copy trading can use the Pepperstone mobile trading app for copy and mobile traders. They can diversify via embedded MT4/MT5/cTrader services,Signal Start, Copy Trading by Pepperstone, and DupliTrade depending on jurisdiction. TradingView for social traders is also available, making Pepperstone one the best Crude Oil trading brokers.
Pros & Cons
- Excellent choice of trading platforms consisting of MT4/MT5, cTrader, TreadingView and Pepperstone Platform
- Market-leading MT4/MT5 upgrade package, Autochartist, and API trading
- Social trading support via Signal Start, MetaTrader Signals, Copy Trading by Pepperstone, DupliTrade
- Leverage of up to 1:400 depends on jurisdiction and superb trade execution
- Demo accounts have 60-day time limits
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsAvaTrade maintains competitive subsidiaries regulated by the ASIC, FSCA, BVIFSC, and FSRA, but traders should avoid the others. Besides its excellent training academy, SharpTrader, AvaTrade offers clients more than 1,250 CFDs from a minimum deposit of $100 with a maximum leverage of 1:500. It features an average commission-free trading environment with minimum spreads of 0.9 pips or 0.13%, but oil traders have a mark-up of 0.3 points with a maximum leverage of 1:200. Five CFDs on oil and energy products plus options contracts offer an excellent choice. Traders may choose between six trading platforms and three social trading providers.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
Crude Oil Trading Platforms Comparison
| | | | | |
Regulators | ASIC, CySEC, FCA, FMA, FSCA, MAS | ASIC, CMA, CySEC, FSCA | ASIC, CySEC, FCA, SCB | ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID |
Year Established | 2008 | 2005 | 2009 | 2010 | 2006 |
Execution Type(s) | Market Maker | ECN/STP | ECN/STP, Market Maker | No Dealing Desk, NDD | Market Maker |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 1.3 pips | 1.2 pips | 1.0 pips | 1.1 pips | 0.9 pips |
Average Trading Cost GBP/USD | 1.7 pips | 1.4 pips | 1.2 pips | 1.4 pips | 1.5 pips |
Average Trading Cost Gold | - | $0.16 | $0.12 | $0.15 | $0.29 |
Trading Platform(s) | Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, Trading View | Other, MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Trading View+ | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ |
Islamic Account | |||||
Negative Balance Protection | N/A | ||||
Get Started Visit Website82% of retail CFD accounts lose money | Visit Website | Visit Website | Get Started Visit Website75-95% of traders on margin lose | Visit Website |
How Do I Start Trading Crude Oil?
Traders should start with in-depth education about the oil market, as it consists of many moving parts. Fundamentals play a significantly more dominant role in trading crude oil than technicals.
The primary drivers for crude oil are:
- Supply and demand, making global GDP a core data point
- OPEC adjustments to production, as it accounts for approximately 40% of global oil production
- Oil production data from Saudi Arabia, the US, and Russia, the top three oil producers
Most crude oil contracts remain priced in US Dollars, but competitive brokers list alternate ones quoted in various currencies, offering advanced traders another variable. Traders should consider the quote currency of an oil contract, a secondary driver of price action but a potential short-term catalyst when no primary ones exist.
Traders should decide which asset suits their trading strategy. Crude oil instruments consist of crude oil futures or spot contracts, oil equities for upstream and downstream companies, or ETFs. The two benchmarks for crude oil are West Texas Intermediate for North America and North Sea Brent for the global market. Opening and funding a trading account is the final step, which allows traders to execute their previously developed crude oil trading strategies.
Oil Trading Explained
Crude oil is ideal for scalpers and high-frequency traders due to its liquidity and low spreads. OPEC lost control of the oil market over the past decade. Russia and the US yield significant influence over price action, sometimes countering Saudi Arabian policies, the primary oil producer within OPEC.
Facts to know before trading crude oil:
- Crude oil is a volatile commodity.
- West Texas Intermediate (WTI) and North Sea Brent are the two most traded oil assets.
- Brent crude remains the global standard, while WTI is more US-specific.
- Brent trades above WTI in terms of price, known as the WTI/Brent spread.
- The oil price is volatile and influenced by geopolitical events, the economy, and the weather.
- CFDs remain the best oil trading instrument, granting traders exposure to price action without purchasing the underlying asset.
Noteworthy:
- US and Canadian regulators do not allow CFD trading and deploy an outdated regulatory framework.
- Therefore, traders can transact in options, which have an expiry date after which they become worthless, or legally binding futures contracts to deliver crude oil.
Oil Trading Regulations
Traders should ensure that they trade with a regulated broker but must also consider the regulator. The ESMA in the EU, the SEC in the US, and the IIROC in Canada have strict and counter-productive rules. Despite the regulatory climate, the most significant frauds occurred in the US and Cyprus. Regulators including the ASIC (Australia), the FSCA (South Africa), the BVIFSA (British Virgin Islands), the FSC (Seychelles), the IFSC (Belize), the DFSA (Dubai), and the CIMA (Cayman Islands) remain among the most competitive and trustworthy ones, but none allow US-based traders.
Trading Crude Oil in the US
Since US traders cannot benefit from CFD trading due to SEC regulations, their best product is an oil exchange-traded fund (ETF). Futures contracts on US crude oil and UK Brent crude traded on the NYMEX, where one contract equals 1,000 barrels, is another option for more significant portfolios. The e-mini crude oil futures contract written by the CME Group offers smaller portfolios an improved asset and consists of 500 barrels of oil.
How to Choose an Oil Broker for Forex Oil Trading?
Since crude oil is a highly liquid asset, most Forex brokers offer it. Traders have various preferences and requirements, but I chose to focus on the below aspects during my best oil trading brokers research, as they apply to all traders.
Traders should look for the following to ensure trading with the best oil trading brokers:
- Regulation - 10+ years of operational experience with a clean regulatory track in a trader-friendly jurisdiction.
- Low Forex trading fees - Low trading fees and low swap rates, including positive ones, and free rollovers on CFD contracts, which ensures traders keep a position after an oil contract expires
- Trading platforms - Algorithmic trading is necessary, while Forex copy trading and mobile trading are optional.
- Asset diversity - Ideally, oil contracts in various currencies quote currencies.
- Deposits/Withdrawals - No internal fees, a choice of payment processors, and low minimum transactions.
How to Choose an Oil Trading Platform
While the trading platform choice depends on individual preferences and requirements, I recommend using one that caters to all trading strategies, which would confirm it as a cutting-edge trading solution, such as MT4 or MT5.
Here is what every competitive trading platform should offer oil traders:
- A clean user-interface
- An extensive charting package for detailed analysis
- Multi-screen support for advanced, in-depth market analytics
- An integrated economic calendar
- Algorithmic trading support, ideally with API trading
- Real-time price feeds, ideally with Level II pricing
- Customizable alerts and push notifications
- A choice of order types, including trailing stop-loss orders and pending orders
- Extensive customization options
- Ability to integrate with third-party trading tools
- Copy trading features
Best Crude Oil Trading Platforms
The MT4 trading platform and cTrader remain two of the best choices. The former is the most versatile one, and the latter the best out-of-the-box solution. The best brokers for trading oil futures will offer one or both. Several brokers also provide proprietary trading platforms as an alternative, but most of them support manual trading only, which suffices for new traders but is not enough for advanced ones.
Oil Trading Account Types
Oil is one of the most volatile assets, and trading from the appropriate account type allows traders to achieve improved trading results. New traders should consider a micro account, ideal for learning how to trade with deposits under $1,000. It precedes the mini and standard ones, best suited for portfolios below and above $10,000, respectively. Some provide VIP accounts that grant special non-trading-related bonuses. Not all brokers maintain a multi-tier account structure. Therefore, traders should ensure that the minimum transaction size is 0.01 lots.
How to Choose the Right Account for Oil Trading
The primary aspect to consider is trading fees, as they will directly impact the profitability of any oil trading strategy. They also reveal which strategies a broker actively supports and passively discourages. Many brokers offer commission-free oil trading, meaning an increase in the spread to earn money from oil trades. A competitive oil spread is $0.03 to $0.04 per contract.
Oil is a highly liquid trading instrument that experiences plenty of volatility. Therefore, traders must trade with a Non-Dealing Desk broker, offering NDD accounts with average order execution speeds below 75 milliseconds, deep liquid pools, and no re-quotes.
What Leverage Is Available for Oil Traders?
The available leverage for oil traders depends on their broker, but it often maxes out between 1:100 and 1:200 at oil brokers with competitive trading conditions. They also offer negative balance protection to ensure traders cannot lose more than their deposit. Oil is a highly liquid trading instrument that trades almost 24/5, which is why oil traders offer generous leverage. Before oil traders engage in leveraged trading, they must understand the relationship between leverage and risk management and the impact of contract sizes in risk management to avoid magnified trading losses.
What Are the Risks Involved in Oil Trading?
While oil is a highly liquid asset that traders can easily buy and sell without facing issues, it can also experience extreme volatility. Oil ranks among the assets facing the most exposure to fundamental events, making it an unpredictable trading instrument unsuitable for beginners.
The core risks involved in oil trading are:
- Supply risks from oil exporters, including OPEC+ production quotas
- Demand risk from oil importers, including the move to renewable energy sources
- Economic data disappointments, primarily GDP data from China, India, and the US
- Interest rate decisions - primarily interest rate increases
- Geopolitical risks, like conflicts, wars, and sabotage of the oil and transport infrastructure
Bottom Line
Crude oil is one of the most-traded commodities, and together with gold, the primary diversification trade for Forex traders. It is a highly liquid asset, usually quoted in US Dollars, and West Texas Intermediate and North Sea Brent are the primary global benchmarks for trading crude oil. Some brokers offer 1:100 leverage with negative balance protection. Spreads, commissions, and swap rates on leveraged overnight crude oil trades are the three trading costs traders must carefully evaluate.
Futures and spot contracts are the two primary assets used to trade crude oil. The former refers to contracts for future delivery, while the latter is for on-the-spot delivery. Alternate methods are via equities in upstream and downstream oil companies and ETFs. ETFs continue to gain market share, which offers less risk if the ETF is well-diversified.
Fundamentals play a significantly more dominant role in trading crude oil than technicals. Therefore, trading crude oil involves more unpredictable short-term catalysts. Supply and demand are the ultimate drivers of price action, making global GDP data, geopolitical events, developments in the supply chain, and production changes from OPEC, the US, and Russia core areas for traders to focus on for long-term trends.
