Oil Trading Guide 2025 — Strategies for Beginners

2025.12.30 2025.12.30
How to Trade Oil in 2025

Artem Parshinhttps://www.litefinance.org/blog/authors/artem-parshin/

Crude oil is one of the most important resources on the planet. Its price reflects the state of the global economy. Oil is extremely popular in the financial markets. Many factors influence its rate, so even experienced analysts find it difficult to predict the cost of the black gold.

In this article, you will learn what factors to consider when trading oil, where and how to buy it, and what strategies to choose when trading this asset.

Should I Trade Oil?

Almost all traders on the stock exchange enter oil trades. Crude oil is one of the best-known exchange contracts. Turn on the TV, and you will see that almost every news broadcast covers oil quotes.

This is why crude oil is one of the most popular financial instruments. Every day a huge number of black gold contracts are concluded on international exchanges. Oil is one of the three most liquid commodities in the world, along with gold and the US dollar. For convenient oil trading, there are many different ways to purchase it.

Futures, options, and oil CFDs are among the most popular ways to trade black gold. CFD contracts are the most convenient and simple as they are available to any investor. Futures and options have their own price, which is not always affordable for novice traders. CFDs do not have this price. These contracts are traded on any exchanges, with no additional fee required for access. That is why oil CFDs are the best choice for all traders on the exchange.

What is Driving Oil Price?

Crude oil is extremely popular, and in demand, so quite a few factors influence its price. They are divided into permanent and temporary.

Permanent factors:

1. Supply and demand

   Oil quotes, like any other commodity, depend on the volume of supply and demand. These are relatively constant values since contracts for the oil supply are concluded based on future deliveries. A good analyst always knows the supply volume for years ahead. Another thing is when the largest exporters and importers experience force majeure, which may affect the execution of these contracts.

2. Seasonal factor

   Despite the fact that oil contracts are planned years in advance, there are certain periods when the activity of buyers and sellers increases. As a rule, oil trading is very active in the first quarter of the year as new contracts are concluded and old ones are reviewed. On the contrary, in the fourth quarter, trading activity is declining. Buyers and sellers are trying to complete all their transactions before the New Year holidays.

Temporary factors:

1. Change in oil production capacity

   With an increase in production, oil-exporting countries will be interested in delivering more to the market. This is a positive signal if the demand is popular among buyers. However, if supply exceeds demand and no one wants to buy oil, its price will decrease.

2. Change in oil reserves in storage facilities

   Every week, the EIA and API, the world’s largest energy organizations, publish data on oil reserves in US storage facilities. A sharp change in these data compared to the previous week could trigger major price fluctuations.

3. Force majeure

   This is one of the main factors. Remember the beginning of the COVID-19 pandemic and what happened to oil demand. The largest oil buyers, China and the EU, have limited consumption by more than 80%, which provoked a drop in oil prices to almost zero. USCrude futures for one day fell below 0 and traded at a negative price.

4. Market sentiment

   Market sentiment is a key pricing factor for any asset, including oil. Even if the buyer’s demand is completely satisfied by the supply, the market cannot be insured against the fact that the major speculator will want to earn. If a large amount of money is poured into the market, then nothing can stop the price rise, which will bring losses to many. However, this amount must be very large.

Oil Grades Available For Trade

Major crude oil producers are promoting their own brands to the market. For example, Russian URALS or the Saudi Arabian ARAB LIGHT. However, there are also internationally recognized grades of the black gold, which are traded on all world exchanges. For example, North American WTI (USCRUDE) and global Brent (UKBRENT).

USCRUDE

USCRUDE is a light North American oil that is typically a few dollars cheaper than Brent. The cost of USCRUDE is pegged to the US dollar. It is possible to trade CFDs 24 hours a day. However, if you trade USCRUDE as futures, the trading hours are determined by the exchange where you buy the contract. Traditionally, purchases are encouraged, meaning the swap of long trades will be positive. But bearish trading will cost quite a lot due to the high swap.

UKBRENT

UKBRENT is a benchmark grade of oil, slightly more expensive than WTI. The cost of Brent is pegged to the US dollar. It is possible to trade UKBRENT CFDs 24 hours a day. If you trade Brent as futures, the trading hours are determined by the exchange where you buy the contract. Traditionally, purchases are encouraged, meaning the swap of long trades will be positive. Sell ​​trades are subject to a higher swap fee.

Oil Futures Markets

Many novice oil traders often have a question about where to trade oil futures. This can be done on centralized exchanges. The largest is ICE or Intercontinental Exchange, with offices in London, New York, Chicago, and Singapore. The largest branch of ICE is located in London, where up to 60% of commodity futures for gold, crude oil, gas, and other popular commodities are traded.

How to Trade Oil

Where is oil traded on the stock exchange? To do this, it is not necessary to enter a commodity exchange and make transactions with physical delivery. Electronic exchanges such as Forex allow traders to trade CFDs. Also, major stock exchanges in any country in the world provide the opportunity to trade futures or options and invest in ETFs.

Oil CFDs

Oil CFDs are one of the most affordable types of oil trading that do not require large investments. As a rule, Oil CFDs are traded in the Forex market, allowing traders to profit from the difference between the opening and closing prices. At the same time, speculators do not need to own physical oil, as it is enough to have a small deposit.

Futures CFD

Oil futures contracts are slightly different from CFDs, but it is the futures that serve as the basis for calculating CFDs. A futures contract is an agreement between a seller and a buyer that guarantees the fulfillment of delivery obligations at a pre-agreed price and time. Unlike CFDs, futures are limited in time with a specified expiration date.

Oil Options

Options are a contract between the seller and the buyer at an agreed-upon price and date of the transaction. There are two types of options: buy (CALL) and sell (PUT). The CALL gives the buyer the right to execute an option or refuse it on the expiration date. The PUT option is the obligation of the seller to sell the required quantity of goods under predetermined conditions. As a rule, options are additional conditions to a transaction with the underlying asset (oil). However, they are listed on the stock exchange as an oil futures contract. That is, the underlying asset for an oil option is oil futures.

Oil ETFs

Oil ETFs are common exchange-traded funds that invest in oil companies. As a rule, ETF issuers are the largest oil producers. However, now oil ETFs investing in derivative financial instruments, such as oil futures and options, are often found on the stock exchange.

Oil Stocks

Buying oil and gas companies’ shares is another way to make money on oil. Quotes of black gold are closely dependent on its production volumes, so the share price of such companies is closely correlated with oil volumes. Pay attention to the price charts of oil companies and oil stocks and you will notice the similarities.

The charts above show prices for UKBrent crude oil and Chevron Corporation, one of the largest oil companies. As you can see, prices have been moving in sync since the beginning of 2020. However, the company’s share prices are more stable than oil prices due to volatility and other factors.

Oil Trading Hours

Trading hours will vary depending on the exchange and the type of oil contract. Trading hours of futures and options on the ICE exchange are determined by stock exchange hours. If traders purchase a CFD in Forex, they can trade oil 24 hours a day, five days a week.

When it comes to trading time regarding the oil trading strategy, there are several periods when online oil trading is more active.

Start Trading on the Chicago Mercantile Exchange

The Chicago Mercantile Exchange is one of the world’s largest commodity exchanges, where futures and other oil contracts are traded. The trading on CME starts at 16:00 LiteFinance trading server time (displayed in the trading terminal).

This period is very profitable for oil CFD day trading, as volumes rise sharply at the opening of trading and the intraday trend changes very often.

Release of EIA Reports on Oil Reserves

When trading oil in the short term, it is important to follow the EIA weekly reports releases. As a rule, US oil reserves data is published on Wednesday at 17:30 (LiteFinance trading server time). However, the data release is moved to Thursday if holidays fall on a Monday or Tuesday. The release time does not change and is recorded in the economic calendar.

The moment of data release is important for the local trend since, at this time, the price of oil fluctuates significantly during online trading. Generally, if, according to the data, oil reserves are declining, market participants regard this as a signal to buy. If oil reserves increase, this can be regarded as a sell signal. However, the best strategy is to place pending orders in both directions. In this case, it is possible to open a profitable trade, regardless of the further price direction.

Advantages and Disadvantages Of Trading Oil

Trading Forex instruments online, including crude oil, is risky. For this reason, I made a list of the pros and cons of crude oil trading.

Oil Analytics

It is much more difficult to analyze the dynamics of oil prices compared to currency quotes. The cost of black gold depends on many factors that must be considered. It is important to understand how they affect the price.

Fundamental Analysis

The fundamental factors that can affect the ratio of crude oil supply and demand are listed below:

1. Changes in oil production volumes by major producers belonging to OPEC and other organizations.
2. Changes in oil reserves in US storage facilities.
3. Oil demand changes from major importers such as China, India, and European countries.
4. Change in demand for oil contracts from investors.
5. Speculative market sentiment and force majeure.
6. Trade policy and tariffs. Trade policies, especially during Trump’s presidency, have seriously affected oil prices. Trade wars, reciprocal tariffs, and sanctions against major oil-producing countries have disrupted established supply chains, leading to market turmoil.
7. Artificial intelligence and mining. The development of AI and cryptocurrency mining increases energy consumption, which in turn can increase demand for oil used to generate electricity.
8. The Chinese government’s anti-crisis measures in 2025 noticeably affected oil demand. Investments in infrastructure, stimulus for domestic energy production, diversification of imports, support for industry, and stimulation of consumer spending helped to revive the economy. These measures increased energy demand and boosted oil prices.

The examples are not far to seek. On December 10, the United States seized three oil tankers off the coast of Venezuela. Donald Trump said that the US would keep the tankers and the oil they were carrying. The EIA (Energy Information Administration) report on the reduction in US crude oil reserves also affected prices.

Against the backdrop of escalating tensions and EIA figures, the price of Brent crude oil rose by more than 6% over the week. These factors benefited traders who were counting on oil price growth.

Technical Analysis

Crude oil technical analysis is also based on the patterns of price movement. It mainly focuses on the price chart, regardless of whether it is short-term or long-term. However, in the case of oil, some patterns on the chart work better than when trading other financial instruments. For example:

1. Elliott Wave Theory. 
2. Candlestick patterns. Especially the volume candlesticks, which will be described in more detail below.

If you are unfamiliar with these types of technical analysis, check out the technical analysis experts’ blog with daily reviews and analytics.

Oil Trading Best Strategy

There are a lot of strategies for trading oil on the stock exchange. The choice depends on how long traders are willing to wait for the result, and what kind of result they consider acceptable. Below are the strategies that are the most stable in terms of profit.

Trading US Oil Data

At the time of the API and EIA data release, oil quotes often rise or fall sharply. According to the strategy, before the news is released, two pending orders, one for buying and one for selling, must be set. Buy Stop is set above the current price, and Sell Stop is set below the current price. It doesn’t matter where the price goes. Traders are ready to open a trade in both directions.

Oil Volume Candlestick

This strategy is detailed in the article “Volume Candlestick Strategy”. The main thing here is to wait for this candle to appear on the H4 timeframe. Then set pending orders and wait for the price to hit the desired level. This strategy works perfectly on the oil chart. It has the highest percentage of positive outcomes, around 97%. For this reason, I often use this pattern when trading oil.

Oil Spread

This strategy is not very popular with individual Forex traders because it is long-term, and sometimes traders have to wait months for results. However, this strategy is definitely number one in the world of trading. Any major crude oil trader will confirm this. The strategy is based on the search for similarities and differences in price discrepancy between UKBrent and USCrude. Their value differs by only a few dollars and is tightly regulated by the market, but there are periods when this difference exceeds $10 and even $20 or reaches parity. During these periods, oil traders make transactions. When the spread between two oil grades diverges, traders sell the most expensive one and buy the cheapest one. With a narrow, almost imperceptible spread, traders open trades in different directions when this spread diverges.

Consider an example. I conducted an oil trade using the first strategy, trading on the news. I did not rely on EIA data but on the results of a very important OPEC+ meeting that took place that day.

Before announcing the result, I set two orders in different directions and waited for one of them to trigger. That’s all I did.

Within a few minutes, the price rose sharply, and a pending Buy Stop order was triggered, opening a long trade. Having set Take Profit, I began to wait. I also removed the sell order so it wouldn’t bother me.

After 30 minutes, the price almost reached the Take Profit level, and I decided to close the trade, with $175 in profit. That’s all.

$175 in 30 minutes is a good result, confirming this strategy’s effectiveness.

Day Trading Oil

When studying intraday crude oil trading or scalping, one should understand that oil value is influenced by global factors. This means that traders should not rely on frequent large fluctuations within the day.

A strategy based on price patterns is well suited for intraday oil trading. I do not recommend using technical indicators such as RSI, Bollinger Bands, EMA moving averages and others when trading oil. All technical indicators have a time delay, and oil rarely trades in a stable trend for a long time. When the indicator signals an entry into the market, the price can already reverse and start moving in the other direction.

So, during oil intraday trading, it is more efficient to use price analysis and time periods.

According to statistics, at the opening of trading on the Chicago Stock Exchange, the oil trend partially changes. Therefore, always consider the trading time and try to close all trades before 16:00 (LiteFinance trading server time).

1. Before the opening of trading in Chicago, enter trades using technical analysis patterns: “Head and shoulders”, “Triangle”, “Flag” and, of course, “Volume candlestick”. Hourly and thirty-minute time frames work well for this trade.
2. When the time approaches 16:00 (LiteFinance trading server time), exit all trades entered according to the pattern and wait. As soon as there are signs of a trend reversal on the H1 timeframe, open a trade towards a new trend. Wait for the trade to become profitable and set the stop loss at the breakeven. If the trade closes with a stop loss, wait for the next day and start over. If the trade continues to make a profit, set a trailing stop at a stable distance and wait until the take profit is triggered.

That’s all. The good thing about the strategy is that traders lose almost nothing and can make good money if the new trend continues until the next day.

Oil vs. Natural Gas

Crude oil and natural gas extraction methods, origin, and applications are almost identical.

Similarities and Differences

According to the extraction method and origin, gas is similar to oil. However, there are differences in the range of application and transportation.

Origin

Crude oil and natural gas are derivatives of the remains of dead organisms formed in the earth’s bowels.

Extraction methods

Crude oil and natural gas are extracted by drilling from special wells. The gas produced during the oil extraction is called associated gas. It can also be used for its intended purpose after additional processing.

Range of application

Crude oil and gas are primarily used as fuel. Oil is used to make gasoline and oil products. Gas is used for space heating at power plants. Oil is also used to manufacture plastic, which is irreplaceable in the modern world.

Transportation

Transportation of oil and gas is carried out by pipelines or special tankers. However, oil is also transported by rail in special tanks.

There is almost no difference between these two fossil fuels. For this reason, exchange contracts for oil and natural gas are often compared with each other, and their quotes are usually directly correlated.

Oil and Natural Gas Correlation

Crude oil and natural gas are used in similar industries. However, they are not fully interdependent, and the correlation coefficient is often negative.

On the chart, you can see the correlation between oil and natural gas prices since the beginning of 2023. The only positive correlation was in 2023, when prices for both assets were rising. In 2024–2025, the correlation was negative: oil prices fell, while gas prices rose.

Natural Gas/Oil Ratio

When considering the ratio of oil and natural gas quotes, it is necessary to consider the units of measurement and the size of the contracts.

For example, on the New York Mercantile Exchange (NYMEX) it is possible to trade these assets in physical form and futures.

One oil lot = 1000 barrels

One gas lot = 10 000 MMBtu

Major traders track the ratio of oil and gas prices by monitoring UKBrent/Natural Gas fluctuations (this pair resembles the most popular UKBrent/WTI).

Over the past 10 years, the difference in rates has changed so often that the popularity of this strategy has increased dramatically.

The strategy builds on the search for contraction and expansion of the cost ratio. For example, in 2008 the oil price was $50 per barrel, and gas was $5 per MMBtu. Thus, the ratio of 10:1 is very large from a historical perspective. Traders around the world began to speculate on the narrowing of the ratio by buying gas and selling oil, which yielded profits many times over. For example, in 2020, oil fell to $15, while gas prices declined to $1.97/MMBtu. However, due to the stronger oil drop, the ratio narrowed to 8:1.

When to Buy Oil

To answer this question, it is important to understand oil pricing. As mentioned above, it is possible to trade black gold in the long term and in the short term.

Long-term oil investment

To buy oil in the long-term, it is necessary to set a time frame. The key factors here are global supply and demand.

Demand is affected by consumption by importing countries, production activity and force majeure.

Example. In 2020, the Chinese authorities adopted a zero tolerance policy due to the coronavirus pandemic. As a result, lockdowns were introduced, refineries were closed, and demand for oil in the country fell by more than 87%. This led to a record drop in oil prices.

Short-term oil investment

There is no need to consider global factors for short-term intraday oil trading. Traders only need to choose a suitable strategy, for example, news trading.

Example. The EIA publishes data on US oil reserves every Wednesday. As a rule, analysts make forecasts the day before publication. For example, they predict an increase in stocks by 5 million barrels. Based on these forecasts, the downtrend continued in the market. But when the EIA report was released, it turned out that stocks were down by 7 million barrels. In such conditions, a local deficit is formed on the market, and oil quotes are growing.

How Do You Buy Oil

It is possible to buy crude oil in many ways. Which one to choose depends on the desired result. How to trade oil on the exchange? How to trade oil in Forex? To these questions, I answer that it doesn’t matter. It’s just that different exchanges offer different types of contracts.

Futures and CFDs

The most common way is to buy oil futures or CFD contracts. Traders can buy futures on the stock exchange, and oil FX CFDs in the Forex market.

ETF Purchase

It is also possible to buy oil ETFs. The most widely used oil ETF is the US Oil Fund, which tracks price fluctuations and allows investors to profit from them.

Stocks of Oil Companies

Oil quotes very often correlate with stock quotes of major oil companies. It would be profitable to form an investment portfolio from the shares of such companies as Shell, ExxonMobil, Chevron, and Rosneft.

Methods Compared: Trading vs. Investing

Each method is effective in its own way. Traders should choose based on their expectations and available time. If trading is a daily job, choose speculative trading. If Forex trading is a hobby that brings profit, then medium-term trading is the best option.

Choosing The Right Broker For Oil Trading

There are practically no dishonest brokers in the modern financial market. Fraudulent players have disappeared due to fierce competition, and only those who have been proven over the years have remained. Check out the article “How to choose a reliable broker?” to choose the most reliable one.

Below are the factors I rely on when choosing a broker:

1. At least ten years of market experience;
2. Wide range of trading accounts;
3. MetaTrader trading terminal;
4. Availability of ECN accounts;
5. Wide range of trading instruments;
6. Mandatory access to trading CFD contracts on NYSE and NASDAQ;
7. The possibility of trading UKBrent and USCrude;
8. Trader’s calculator, taking into account the account type of a given broker;
9. Professional and responsive support service;
10. Availability of affiliate programs.

If your broker meets these criteria, you have made the right choice. I made my choice in 2012 when I started trading with the LiteFinance broker.

Price chart of USCRUDE in real time mode