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Investing in Crude Oil

Crude Oil is the world’s most heavily traded commodity. The volumes of trade in oil that flow daily through commodities exchanges dwarf those for other commodities. This is because buyers and sellers in the market include not only speculators, funds and investors but also oil producers and refiners who use futures to hedge their exposure -that is, cushion themselves from price swings by fixing prices three, six, twelve months or longer in advance. This has led to an efficient market, resulting in efficient pricing and narrow spreads on Bid/Ask prices.

Oil futures are traded on New York Mercantile Exchange (NYMEX), which is the most liquid market for oil futures; the Intercontinental Exchange (ICE), the key oil exchange in Europe; the Shanghai Futures Exchange (SHFE) and the Tokyo Commodities Exchange (TOCOM).


Not all crude oils are created equal. They vary in quality based on their sulfur content and density. The most desirable crude oils are classified as “light and sweet,” containing a high proportion of fractions used to produce gasoline, kerosene, and diesel. The term “sweet” refers to oil with low sulfur content, which historically was determined by prospectors who would taste and smell the oil. Light and sweet crude oils are sought after due to their versatility and ease of refining into high-demand products

WTI’s nearest rival, Brent Crude oil, a type of oil from the North Sea traded on ICE in London, has risen fast and has become the key contract the industry will look at when trying to assess what the global price should be. You will often see both Brent and WTI quoted as spread bets or CFD markets.

The quality of crude oil varies from field to field, it is classified depending on how much sulphur it contains and how light or heavy it is. Crude oil is not used in its original form but is refined into products such as gasoline and kerosene, a fuel for planes, and distillates such as diesel and heating oil used to either power buses, trains and machinery or to heat building and fire industrial boilers.

CME Group’s West Texas Intermediate (WTI) is a light, sweet crude oil that serves as the benchmark for U.S. oil pricing. WTI futures are the most actively traded crude oil contracts on the NYMEX, with a high degree of liquidity. Until recently, WTI was considered the global benchmark for the oil industry. However, in recent years, WTI prices have diverged from global oil prices due to regional storage and transportation dynamics in the United States. Despite this, WTI remains a crucial reference point for the U.S. oil market and is widely used as an underlying asset for Contract for Differences and spread betting.

The price of crude oil is determined by a delicate balance between supply and demand factors, geopolitical events, and market sentiment. On the supply side, production decisions by major oil-exporting countries, particularly OPEC members, can significantly impact prices.

Disruptions to production, such as conflicts or infrastructure issues, can lead to supply shortages and higher prices. Demand is influenced by global economic growth and energy consumption patterns, with stronger economic expansion typically driving higher oil prices. Geopolitical events, like tensions between oil-producing nations or changes in trade policies, can introduce volatility.

Market sentiment and speculative activity also play a role in short-term price movements. Investors closely monitor data releases, such as weekly U.S. oil inventory reports, and adjust their positions based on expectations and market trends. Navigating the complex web of factors influencing crude oil prices is crucial for investors seeking to make informed decisions in this dynamic market.

Crude oil is readily available to traders online as a Contract for DifferenceFutures contract or Exchange Traded Fund. UK residents can trade the index through a tax-free Spread Betting broker.

There are a number of ways in which investors can gain exposure to Crude Oil. Exchange Traded Funds or ETFs will offer investors access to the Crude Oil price in a variety of ways. Long Crude Oil ETFs will enable investors to profit from a trade when the price is going up, while Short ETFs will help investors to profit from a falling Crude Oil price. Bear in mind that you will lose money should the price of Crude Oil move against you. Leveraged ETFs provide greater exposure to the tracked Crude Oil price by magnifying price movement. This will work in an investors favour when the price is moving in the direction of the ETF, but against it when the price moves against the trade. 

Invest in Crude Oil with these ETF platforms

ProviderDepositFeesISAsInvestment Options
Interactive Brokers
Interactive Brokers
£1 initial depositno platform fee
£3 per trade
Stocks & Shares ISAs
Junior ISAs
UK Shares
Non-UK Shares
Funds
ETFs
£3 / €3 per trade for Western European stocks, with no added spreads, account minimums or platform fees. Pricing on US stocks starts at just USD 0.005 per share. There is a minimum monthly activity fee of £3
 
Charles Stanley Direct
Charles Stanley Direct
£500 initial deposit
£50 monthly minimum
0.30% platform fee
£10 per trade
Stocks & Shares ISAs
Junior ISAs
UK Shares
Funds
ETFs
Bonds
Minimum charge of £5, maximum of £50 per month for all individual accounts held with Charles Stanley Direct. £10 transaction fee on shares, £4 for funds. £50 of trading credits available every six months from October 2024.
 
IG
IG
£500 initial deposit
£50 monthly minimum
£96 platform fee
£8.00* per trade
Stocks & Shares ISAsUK Shares
Non-UK Shares
Funds
ETFs
Robo Advisor
Trade 3+ stocks per month for active trader cost of £3.00 on UK stocks. Clients holding investments will be charged a platform fee of £8 per month which can be offset against a trade over the period. IG's Smart Portfolio's are a low cost option for those who are unsure where to invest their money.
 
Hargreaves Lansdown
Hargreaves Lansdown
£100 initial deposit
£25 monthly minimum
0.45% platform fee
£11.95* per trade
Stocks & Shares ISAs
Junior ISAs
Lifetime ISAs
UK Shares
Non-UK Shares
Funds
ETFs
Bonds
Robo Advisor
Trade 10+ stocks per month for active trader cost of £8.95 or 20+ at £5.95. Additional charge of up to £45 per annum on stocks and shares. There's no dealing charge for buying or selling funds but you'll pay a holding fee of up to 0.45% per annum. Ready-made portfolios are available for investors that are unsure where to invest their money for an additional fee.

For short term exposure to the Crude Oil price, traders can use Contracts for Difference or CFDs to track the index. CFDs provide an opportunity for traders to make trades on a rising or falling prices. UK investors may prefer to trade with a spread betting provider where any gains are tax free.

Trade Crude Oil with these CFD brokers

BrokerMinimum DepositMarketsProducts
Pepperstone
Pepperstone
£0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
FX
Spread Betting

With a strong focus on the trading experience, industry leading technology, low costs and award-winning client support, we feel that Pepperstone is a good option for the more established high volume day trader.

 
FP Markets
FP Markets
$100Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
FX

FP Markets is an established ASIC, CySEC FSP and CMA regulated broker. They offer access to the industry leading MetaTrader platforms and provide pricing directly from the market meaning fast execution and transparent pricing. A 24/7 multilingual client support service has won recognition through the highly respected Investment Trends awards.

 
Plus500
Plus500
$100Commodities
Currencies
Indices
Stocks & Shares
CFDs
Futures

Plus500 Ltd has a premium listing on the Main Market of the London Stock Exchange since 2018 (symbol: PLUS) and is a constituent of the FTSE 250 index. Also, the UK subsidiary - Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). The broker offers access to CFDs on Commodities, Forex, Stocks, ETFs, Options and Indices; Real Shares (Available in certain EU countries only); and Futures (Available in the US only). This broker has +26 million registered customers across 50 countries.

Risk Warning: CFDs are complex instruments and carry a high risk of losing money quickly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money

Futures are derivative contracts that set a specific price for the sale of an asset at a specific time in the future. A futures contract is a legal agreement between two parties to buy or sell an asset at a predetermined price on a future date. It’s a binding commitment traded on exchanges like CME Group.

Trade the FTSE 100 Index with these Futures Brokers

BrokerMinimum DepositMarketsProducts
Plus500
Plus500
$100Commodities
Currencies
Indices
Stocks & Shares
CFDs
Futures

Plus500 Ltd has a premium listing on the Main Market of the London Stock Exchange since 2018 (symbol: PLUS) and is a constituent of the FTSE 250 index. Also, the UK subsidiary - Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). The broker offers access to CFDs on Commodities, Forex, Stocks, ETFs, Options and Indices; Real Shares (Available in certain EU countries only); and Futures (Available in the US only). This broker has +26 million registered customers across 50 countries.

Risk Warning: CFDs are complex instruments and carry a high risk of losing money quickly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money

 
Interactive Brokers
Interactive Brokers
$0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
ETFs
FX
Futures
ISA
Stocks & Shares

Interactive Brokers is one of the world’s leading futures brokers with the ability to offer direct market access to a range of securities. With previous personal experience of trading with this broker, The Armchair Trader knows that they offer excellent platform stability, an excellent range of markets, and solid customer support

 
IG
IG
£0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
ETFs
FX
Futures
ISA
Spread Betting
Stocks & Shares

Widely recognised as the largest broker of its kind for CFDs and Spreadbetting, IG has now expanded its services to include Equities and ETF trading. Their range of markets is wide reaching while both trading and share dealing costs are low. We really like their Smart Portfolio's which are ideal for inexperienced investors to gain exposure to the markets. Clients will get 4.5% AER variable interest on uninvested GBP balances up to £100,000.

With deeper pockets to invest in their services than most brokers, IG's platform suite and trading support tend to lead the way. IG is a good all-rounder for novice through to experienced traders and investors.

Risk Warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Crude Oil ETFs

WisdomTreeWTI Crude OilCrude Oil
LON:CRUD / USD
Buy at Hargreaves Lansdown Buy at IG Buy at Charles Stanley
WisdomTreeWTI Crude Oil 3x Daily LeveragedCrude Oil
LON:3OIL / USD
Buy at IG
WisdomTreeWTI Crude Oil 3x Daily ShortCrude Oil
LON:3OIS / USD
Buy at IG
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