Crude oil trading brokers provide services for contracts for difference (CFDs) or futures contracts. Since CFD trading isn’t legal in the U.S., this article focuses on brokers that support trading in crude oil futures.
Take a look at our top crude oil brokers to get started.
Best Crude Oil Brokers:
- Best for Trading Software: TD Ameritrade
- Best for High-Volume Traders: Interactive Brokers
- Best for Research: E*TRADE
- Best for Simulated Trading Strategies: NinjaTrader
- Best for Free Mobile App: Discount Trading
Trading Crude Oil
Like the stock market, the crude oil market is made up of different participants that include both investors and speculators. But the crude oil market differs because it is more prone to volatile swings due to geopolitical forces.
The 2 main types of oil that futures contracts are based on are West Texas Intermediate (WTI) and North Sea Brent. WTI is a lighter and sweeter type of oil better for gasoline production with a low sulfur content of around 0.24%. North Sea Brent is heavier and best for diesel fuel production. It has a sulfur content of roughly 0.37%. In the oil industry, crude oil with a sulfur content below 0.5% is considered “sweet.”
The modern history of the crude oil market began in the 1970s. Then crude oil prices spiked to more than $100 per barrel after Saudi Arabia imposed an embargo on the commodity. Oil prices declined in the 1980s as supplies increased. The price of crude oil had fallen below $10 per barrel by 1998, which marked a major low point at the time.
Prices then exploded higher, and the price of crude oil hit its all-time high of $145.31 per barrel in July 2008 to coincide with the global financial crisis. Since 2008, oil prices have fluctuated between $32 and $112 per barrel. The commodity currently trades at $53.12 per barrel for WTI and $58.82 for Brent crude. The price difference is known as the Brent/WTI spread.
Trading Crude Oil in the U.S.
If you can’t trade CFDs because you live in the U.S., trade crude oil via the U.S. futures markets and use exchange-traded funds (ETFs). FOREX.com offers crude oil CFD trading outside the U.S. for a 1% margin fee on the MetaTrader 4 or FOREX.com trading platforms.
An important oil futures contract is the WTI crude oil contract that trades on the New York Mercantile Exchange (NYMEX) under the symbol CL. It represents 1,000 barrels of oil.
Another is the NYMEX’s Brent crude oil contract that trades under the symbol BZ — it’s also based on 1,000 barrels of oil. The smaller CME Group’s E-mini crude oil futures contract trades under the symbol QL and represents 500 barrels per contract.
Things to Consider Before You Invest in Crude Oil
Many influences can affect the price of crude oil. Geopolitical event
- Trade with a plan. Outline your strategy with sound risk and money management. Include the parameters for entering and exiting trades, the amount of risk you plan to take
andyour objective for exiting the trade. You can source a trading plan from another trader or use a social trading service if needed.
- Test your plan. Many online brokers give you the option of opening a demo account to practice trading. You can test your plan in the demo account before you commit any funds to a live account.
- Pick a broker. You’ll probably have a feel for the oil market and the best brokerage for you after you trade in some virtual accounts. Make sure to carefully consider your needs before opening an account.
- Start trading. Open and fund your account, research your plan
andget started. Make sure that you carefully assess and manage the risk involved in each trade. Set some safe stop-loss levels to avoid blowing out your account.
The Best Crude Oil Brokers
Determine your needs to find the best online brokerage for trading in crude oil. You can find our picks for the best crude oil futures brokers for U.S. traders below.
Best for Trading Software: TD Ameritrade
TD Ameritrade gets our top spot for excellent execution that includes oil futures. The broker’s trading software and the thinkorswim platform give serious traders an edge. You’ll get access to advanced research and analysis tools. Automatic features and market scans will help you generate trading ideas.
TD Ameritrade also provides a web-based platform and a mobile option for Android and iOS devices. The broker can trade the 3 standard CL, QM and BZ crude oil futures. Trading hours for crude oil futures start on Sunday at 5 p.m. EST and run until 4 p.m. EST on Friday (with a 1-hour break from 4 p.m. to 5 p.m. each weekday).
TD Ameritrade doesn’t require a minimum deposit. But you must deposit at least $2,000 as margin to be considered for a futures and options account. Commissions for oil futures are a standard $2.25 per contract plus exchange and regulatory fees.
Best for High-Volume Traders: Interactive Brokers
Interactive Brokers aims at more advanced high-volume traders. You can trade a myriad of tradeable assets, including U.S. oil futures. Interactive Brokers also
Its trading platforms include the easy-to-use Client Portal and the web-based IBKR WebTrader. More advanced traders will also appreciate the more sophisticated IBKR Pro Trader Workstation (TWS) desktop and mobile platforms. The broker also has an application programming interface (API) if you want to get your own trading algorithm software written.
Interactive Brokers has tiered and fixed commission schedules. The tiered schedule lowers commissions as your trade volume increases, while the fixed schedule charges a mere $0.85 per U.S. futures and futures options contracts plus exchange and regulatory fees.
Interactive Brokers charges inactivity fees on inactive accounts, so keep that in mind if you plan on taking trading breaks. It also requires a minimum deposit of $10,000 to open an account.
Best for Research: E*TRADE
E*TRADE gets our number 3 position for its impressive research center powered by the CME Group — the world’s largest futures exchange. E*TRADE also offers a comprehensive list of options on oil futures.
E*TRADE’s trading platform is easy to navigate for traders at all levels. The company also offers a high-tech custody platform for financial advisors, as well as a top-rated stock plan administration platform.
The 3 standard CL, QM and BZ crude oil futures contracts traded on U.S. exchanges can be traded. E*TRADE charges $1.50 per futures contract plus exchange and regulatory fees. Oil futures can also be traded in an IRA account.
Another selling point is its associated bank and extensive educational resources like daily video market commentary. You can get $600 when you open and fund a new futures trading account with $250,000.
Best for Simulated Trading Strategies: NinjaTrader
NinjaTrader has an excellent trading platform for novice and advanced traders alike. You can access unlimited simulated forex trading, unlimited support and daily training sessions and a free 24-hour emergency desk.
NinjaTrader features more than 100 technical indicators, advanced charting features and thousands of 3rd-party applications for automating your trading. The platform also gives you control of your own data feed to test your trading strategies.
You can even trade micro-sized futures contracts for a $50 margin, while E-mini contracts require $500 for margin. You only need $400 to open a futures account with NinjaTrader.
NinjaTrader has a number of educational resources and a news and blog section. You can try the broker’s futures trading platform at no charge for 2 weeks in a demo account powered by live market data.
Best for Free Mobile App: Discount Trading
Discount Trading made our list for its low commissions and the variety of trading platforms for traders at all levels. Discount Trading’s commissions are among the lowest in the industry, so it’s perfect for day traders and high-volume or high-frequency traders.
If you trade more than 50,000 contracts a month, for example, you pay only $0.19 per contract. For less active traders, futures commissions are $0.49 per side — so buying and selling 1 futures contract would cost you less than $1 after exchange and regulatory fees.
Discount Trading features 20 different trading platforms that include eSignal, barchartTrader, CGQ Trader, CGQ Integrated Client, Trading Technologies, Firetip, TradingView and Sierra Chart.
You can also get a free mobile app for Android or iOS devices or access the broker’s web-based application. It offers 5 different redundant routing solutions to meet the needs of advanced traders.
You’re ready to move on to live trading once you’ve tested your plan in the demo account. Oil futures can be extremely volatile, so they’re the perfect vehicle for day and high volume traders.
Be aware that the price of oil has traditionally been a function of the big world producers, so any disruptions in the supply lines can directly affect the price quickly and substantially. Moves of 2% to 3% and even as much as 10% to 20% occur often, so trade with stop loss orders at all times to prevent excessive losses.
Crude oil prices react to many variables, which is why oil traders keep an eye on the news. Make sure you watch world events closely when you trade oil futures.
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