Energies

Many of you came to Ubrokers as forex traders, but you should know there’s plenty of potential opportunities in energy trading too. The energy markets are some of the most interesting, and exciting markets around. Trading energy involves buying and selling commodities like crude oil, natural gas, heating oil, and gasoline. Because the prices of these commodities can fluctuate heavily they are very attractive for traders and speculators looking for good markets to trade.

We believe trading the largest and most liquid energy markets makes the most sense. These include West Texas Intermediate crude, Brent crude, gasoline, and natural gas. Products like heating oil and various forms of electricity aren’t as liquid, they might be quite erratic, and may require specialized knowledge. Stick with the liquid markets and trade popular energy products.

Popular Energy Contracts

The most popular energy contracts for traders are as follows:

  • West Texas Intermediate (WTI) Crude Oil
  • Brent Crude Oil
  • Gasoline
  • Natural Gas

As is the case with most forex traders you probably have experience judging price movements based on the economic data, and energy can also be examined in the same way. One example is the seasonality of the energy markets. As summer approaches in the U.S. we often see gasoline prices rising because summer means vacations and more driving. Winter can also bring seasonality, but in this case to natural gas. Because the northern half of the U.S. experiences very cold winter weather, and uses a significant amount of natural gas for heating, prices can follow the patterns of U.S. winter temperatures.

You will also see geopolitical movements in crude oil. For example, Mid-east tensions can cause a rally in crude. Any conflict or threat to disrupt supplies will spur rising prices. And once the disruption or tension is resolved prices retreat.

It’s also worth noting that crude oil markets are notoriously sensitive to the value of the U.S. dollar. This is because crude is priced in U.S. dollars. So, when the U.S. dollar strengthens it makes crude oil more expensive to countries outside the U.S. who will need to purchase dollars at a higher rate in order to purchase their oil. That can cause a drop-in oil prices. The inverse is also true, where oil prices will often rise when the U.S. dollar is weaker.

Advantages of Energy CFD Trading on Ubrokers

You’ll find many ways to invest in the energy markets including options, futures, ETFs, and energy related equities. You can even buy a real barrel of oil if that’s your thing. Each method comes with its own risks and can range from a direct investment in oil to a hedging strategy or a speculation on price.

Most importantly if you want to speculate on crude oil is that you’ll need a broker account of some sort, and this is where Ubrokers can help. We offer speculation on crude through CFDs, which many of our traders find convenient to use.

Of course, you could find a futures broker to trade crude oil futures, but that can be an expensive proposition. In the U.S. you would be required to have over $5,000 per contract to fulfil the margin requirements of futures trading. That’s for a full lot, and in reality, you’ll want much more because you’ll need a buffer to avoid a margin call if prices initially move against you.

Compare that with the CFD trading offered at Ubrokers where you are able to trade in far smaller amounts than the standard futures contract. This will significantly lower the margin requirements and give you a smaller tick value on each contract as well, which is an advantage to the average investor trading crude oil.

Trading CFDs is a smear idea and since the value of CFDs moves in lockstep with the underlying futures market the difference between the two, other than margin requirements and tick value, is basically negligible and trading CFDs won’t affect performance when compared with futures.

Ubrokers can help with your education of the oil markets and analysis of price trends and fundamental factors. Open an account to experience the excitement of Energy CFD trading.

Company Information: This website (www.ubrokers.com/eu) is operated by Capital Securities S.A., a Greek Investment Firm, authorized and regulated by the Hellenic Capital Market Commission (“HCMC”) with licence number 2/11/24.5.1994. The Company is registered in Greece under GEMI with register number 31387/06/Β/94/18. Capital Securities S.A. is registered at 58, Metropoleos Street, 105 63, Athens, Greece.

 

Capital Securities S.A. owns and operates the “Ubrokers” brand.

 

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance does not constitute a reliable indicator of future results. Future forecasts do not constitute a reliable indicator of future performance. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk tolerance. You should not deposit more than you are prepared to lose. Please ensure you fully understand the risk associated with the product envisaged and seek independent advice, if necessary. Ubrokers does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. Capital Securities S.A. is not a financial adviser and all services are provided on an execution only basis. Please read our Risk Disclosure document.

 

Regional Restrictions: Capital Securities S.A. offers services within the European Economic Area (excluding Belgium) and Switzerland.

 

Capital Securities S.A. does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. Capital Securities S.A. is not a financial adviser and all services are provided on an execution only basis.

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