Trading crude oil: how WTI and Brent differ

Crude oil has a wide range and a dense news flow. That is what makes it attractive, and what makes it
dangerous — plus one technical feature many people do not discover until they see an adjustment on their
account.

1. WTI and Brent

• WTI — the US benchmark, delivered at Cushing, Oklahoma. More sensitive to US
  inventories and production.
• Brent — the international benchmark, produced in the North Sea and shipped by sea.
  More sensitive to geopolitics and global demand.

The two usually move together, but the spread between them changes, and that spread is itself an
indicator of the supply situation.

2. Contract size

At most CFD brokers, one lot of oil is 1,000 barrels. So a $1 move per barrel changes
the account by $1,000 per lot.

With a typical daily range of $1–3, a one-lot position swings $1,000–3,000 in a day. That figure has to
go into your sizing from the start.

3. The technical feature to know: the contract roll

Oil CFDs are based on futures contracts with expiry dates.
As one nears expiry, the broker rolls to the following month.

Because the two contracts trade at different prices, the broker makes an adjustment on your
account so that the roll itself neither gains nor costs you anything. But the price on the chart
jumps by an amount that reflects no market movement at all.

The practical consequence: a stop loss or take profit set at an
absolute price can be triggered by that jump. Check the broker’s roll calendar — usually published in their
notices — before holding an oil position across one.

4. The oil market’s calendar

• Tuesday — the unofficial inventory report, an early signal.
• Wednesday — the official US inventory report. The largest weekly volatility event.
• OPEC+ meetings — scheduled in
  advance, and the largest events of the year.
• Monthly energy outlook reports from the major agencies.

5. Cost

Oil spreads are usually 3–6 cents, which is $30–60 per lot — high in money terms.
Swap varies with the shape of the futures curve and can be
positive or negative depending on the period, unlike gold.

6. Three notes for beginners

• Start at 0.1 lots or smaller. The large
  contract size makes sizing mistakes far more expensive
  than on a currency pair.
• Do not hold a full-size position through the inventory report.
• Check the roll date before holding for several days.

This article is for information only and is not investment advice. Conditions and fee levels are published by the brokers and can change at any time — check with the broker you actually use. Leveraged forex and CFD trading carries a high level of risk and can cost you your entire deposit.