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The Good Oil: Crude prices rise after Fed meeting, geopolitical risks subside

By Kyle Rodda

13:08, 3 November 2023

Crude prices have rebounded following the Fed’s “dovish hold”. We review the key drivers and technical levels for WTI Oil.

Oil prices join post-Fed risk-on rally

The price of crude has rebounded after the US Federal Reserve signalled a potential end to its rate hiking cycle. Prices are being influenced by mixed macroeconomic fundamentals, with US ISM Manufacturing PMI revealing a precipitous drop in activity last month and indicating weaker growth in the future.

Volatility subsides, but geopolitical risks persist

Implied volatility in oil markets has subsided as the risks associated with the Israel-Hamas war ease at the margins. Israel has taken a more measured approach in its ground incursion into the Gaza Strip, diminishing concerns about a broader regional conflict.

(Source: CNBC, 03/11/2023, 12:00PM)

US inventories lift less than expected

US Crude Inventories rose last week, according to the latest EIA report. However, the 0.8 million barrel increase was below the 1.5 million forecast, indicating continued tightness in the market. Excluding the Strategic Petroleum Reserve, which has drawn down considerably in the past two years, US oil reserves remain relatively low, pointing to heightened sensitivity to the risk of global supply shocks.

Natural Gas

2.16 Price
+1.220% 1D Chg, %
Long position overnight fee -0.0630%
Short position overnight fee 0.0410%
Overnight fee time 21:00 (UTC)
Spread 0.0050

Oil - Crude

78.74 Price
-2.840% 1D Chg, %
Long position overnight fee 0.0511%
Short position overnight fee -0.0731%
Overnight fee time 21:00 (UTC)
Spread 0.040

Oil - Brent

81.89 Price
-2.560% 1D Chg, %
Long position overnight fee 0.0304%
Short position overnight fee -0.0524%
Overnight fee time 21:00 (UTC)
Spread 0.045


29.25 Price
-2.070% 1D Chg, %
Long position overnight fee -0.0202%
Short position overnight fee 0.0120%
Overnight fee time 21:00 (UTC)
Spread 0.050
(Source: US Energy Information Administration)

Crude prices pull back to support zone

After a further pullback this week, crude prices have turned around as buyers defended support just above $80 per barrel. Downside momentum is slowing, while a short-term downward sloping trendline has broken. A break below $80 could open a deeper pullback towards the 200-DMA. Technical resistance might be around $84.30.

Past performance is not a reliable indicator of future results

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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