Why is Brent Crude oil important to traders?
Brent Crude is an important benchmark that defines the prices for oil around the world. Primarily extracted from under the North Sea, this light low-sulphur oil type consists of Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also referred to as the BFOE Quotation).
A light sweet oil, Brent Crude is often more preferable than heavy sour crude. It can be easily refined into gasoline and diesel.
In general, two-thirds of the internationally traded oil is priced relative to Brent Crude.
Brent Crude trading hours
The ICE Brent Crude futures contracts can be traded within:
- UK hours (Open: 01:00 London local time and 23.00 on Sundays. Close: 23:00 London local time)
- EST hours (Open: 20:00 and 18:00 on Sundays. Close: 18:00 the following day)
- Chicago hours (Open: 19:00 and 17:00 on Sundays. Close:17:00 the following day)
- Singapore hours (Open: 08:00 and 06:00 on Monday mornings. Close: 06:00 the next day)
If you choose to trade CFDs, you can follow the Brent Crude prices live in US dollars with the comprehensive Brent oil price chart. You can trade Brent oil from Monday to Friday from 00:05 – 21:00 with Capital.com.
Why trade Brent oil?
There are several major reasons to trade energy commodities, including Brent oil:
Oil commodities in an equity-only portfolio can lower the volatility, due to the absence of a correlation between the asset classes.
- Safe Haven
Commodities can serve as a safe haven in the times of global economic uncertainty and market turbulence, because they can retain their value.
- Inflation Hedging
Commodities’ intrinsic value is independent from currencies. They will often hold their value, even if a currency falls during the period of inflation.
- Speculation on Brent oil prices
Commodities may be highly volatile, experiencing wild price swings. Trading Brent oil CFDs can become a good way to benefit from drastic oil price fluctuations.
Trading Brent oil requires careful consideration, due to the market’s high volatility and a wide choice of available instruments – from oil derivatives, such as futures and CFDs, to oil and gas company stocks.
Trading Brent oil may be extremely volatile and there can be a high degree of risk.
The chance of making large profits goes hand-in-hand with the risk of large losses.
How to trade Brent oil CFDs?
One of the easiest and most popular ways to trade Brent oil is with CFDs.
A contract for difference (CFD) is a type of contract between a trader and a broker in order to try and profit from the price difference between opening and closing the trade.
Most CFD trading providers allow traders to speculate on the price of oil futures contracts, however the contact sizes are often much smaller than standard future contracts. For example, a Brent Crude oil CFD order can be for 25 barrels, instead of a standard futures contract of 1,000 barrels.
Trade Brent Crude Oil Spot CFD
Moreover, trading Brent oil through CFDs is often commission-free, with brokers making a small profit from the spread and traders trying to profit from the change in price.
Additionally, the 10% margin offered means that you have to deposit only 10% of the value of the trade you want to open, and the rest is covered by your CFD provider. For example, if you want to place an order for $1,000 worth of Brent Crude oil spot and your broker requires 10% of margin, you will need only $100 as the initial capital to open the trade.
CFD trading offers great opportunities with a reliable CFD broker. Sign up at Capital.com and access the most popular global markets via our web platform or our ultimate trading app.
Why trade Brent oil CFDs with Capital.com?
Advanced AI technology at its core: A Facebook-like news feed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative SmartFeed offers a range of materials to put him or her back on the right track. The neural network analyses in-app behaviour and recommends videos and articles to help polish your investment strategy. This will help you to refine your approach when you trade Brent oil.
Trading on margin: With the help of margin trading, Capital.com provides you with the opportunity to trade Brent oil CFDs and other top-traded commodities, even with a limited amount of funds in your account.
Trading the difference: By trading Brent oil CFDs, you don’t buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the Brent crude oil price. CFD trading is no different from traditional trading in terms of its associated strategies. A CFD investor can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives. So whether your Brent oil price forecast is positive or negative, you can trade Brent oil in both directions.
All-round trading analysis: The browser-based platform allows traders to shape their own market analysis and make forecasts with sleek technical indicators. Capital.com provides live market updates and various chart formats, available on desktop, iOS, and Android.
Focus on safety: Captal.com puts a special emphasis on safety. Licensed by CySEC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows clients to withdraw money 24/7 and keeps traders’ funds in segregated bank accounts.
Businesses invested in Brent Crude oil
Another popular but indirect way of trading Brent oil is investing in equities of companies involved in oil extraction, production, distribution and refinery. A list of the major players on the Brent oil market includes the following:
Based in Beijing, China, Sinopec is the largest oil refiner in Asia by annual volume processed, with domestic crude production hitting 248.93m barrels per year in 2018.
ExxonMobil is a constituent of the seven world-renowned oil and gas "supermajors," operating 37 oil refineries in 21 countries with a combined capacity of processing around 6.3m barrels of oil equivalent per day.
Royal Dutch Shell
Royal Dutch Shell is another member of the globe’s oil and gas "supermajors" that has operations in over 70 countries, produces around 3.7m barrels of oil equivalent per day and owns 44,000 oil service stations worldwide.
With operations in almost 80 countries worldwide, BP is another name on the list of the world's oil and gas "supermajors," producing over 3.7m barrels of oil equivalent per day and running around 18,700 service stations across the globe.
Included in the list of the oil and gas "supermajors", Total SA produces more than 2.7 of oil equivalent per day and operates over 900 subsidiaries, covering all areas of energy production.
Brent Crude price history
In the past few decades, the Brent Crude price has experienced some dramatic peaks and troughs. At the beginning of 1999 it was trading as low as $10 a barrel. Then, over the next few years the price steadily climbed until it reached a peak of $140 a barrel in mid-2008. However, during the second half of 2008 the Brent crude price fell abruptly to less than $40 per barrel.
Since that time, the commodity has zigzagged back and forth, rising higher than $100 and dropping lower than $40 per barrel. The latest Brent oil price, as of December 2, 2019, stood at around $61 per barrel.
During the past few decades, the Brent crude price has experienced some dramatic peaks and troughs. At the beginning of 1999, it was trading as low as $10 a barrel. Then, over the next few years, the price steadily climbed until it reached a peak of $140 a barrel in mid-2008. However, during the second half of 2008, the Brent crude price fell abruptly to less than $40 per barrel.
Since that time, the commodity has zigzagged back and forth, rising higher than $100 and dropping lower than $40 per barrel. Brent crude oil ended 2019 at around $66 per barrel.
At the beginning of 2020, the price of oil started falling sharply as the coronavirus that originated in China began to spread internationally, leading to a sharp drop in fuel demand.
On March 10, 2020, the price of the commodity fell more than 30 per cent to trade at its four-year lowest of $31.02 per barrel. Such a steep slip represented the biggest single drop since the start of the first Gulf war in 1991. The dramatic price plunge was triggered by a row between Saudi Arabia and Russia over oil output.
On March 11, Brent prices started a new trading session at $35.61, rebounding on hopes for fresh economic stimulus to soften the economic impact from the coronavirus outbreak.
So what are the reasons of these drastic price fluctuations? The two main drivers are the following:
- Economic factors
For example, an economic slowdown, which limits industry and individuals demand for energy and also their spending capacity.
- Geopolitical factors
For example, war or political unrest in a sensitive part of the world can affect the work of oil producers in the area. Additionally, OPEC increasing or cutting oil production can affect the price – for example, when supplies are constrained, the Brent Crude oil price is expected to rise.
Despite the fact that the oil market is global, crude oil has numerous regional grades. Every type slightly differs from the other in terms of sulfur content (sour vs. sweet) and viscosity (heavy vs. light).
All the major oil trading regions have defined benchmarks to monitor the prices of oil commodities, these include:
- West Texas Intermediate (USA)
- Western Canadian Select (Canada)
- Dubai Crude (Middle East)
- OPEC Reference Basket
- Bonny Light (Nigeria)
- Tapis (Singapore)
- Urals (Russia)
Note! Brent Crude and WTI are considered the world’s most important benchmarks.
Top ten oil producing countries:
|Rank||Country||Oil production (million barrels a day)|
|#8||United Arab Emirates||3.79|