10 Best Crude Oil Trading Brokers for 2023

“Crude oil trading brokers” are brokerage firms that facilitate the buying and selling of crude oil, primarily in the form of futures contracts or other financial instruments, on behalf of investors or traders.

These brokerage firms may also be referred to as oil trading brokers, commodities brokers, oil brokers, online crude oil trading brokers.

Reputable crude oil trading brokers typically operate under the regulation of governmental or independent bodies to ensure fair practices and the safety of traders’ funds.

To access the oil market, these brokers provide online trading platforms and tools such as demo accounts with virtual balance facilitating risk-free practice, and leverage which allows traders to control a large position with a relatively small amount of capital.

Brokers’ primary revenue includes commissions on trades, spreads (the difference between the buying and selling price), and sometimes overnight financing fees or swaps.

To stay competitive and retain clients, many brokers offer educational resources such as webinars, articles, and training courses on crude oil trading and market analysis.

In this article, we have not only included brokers that offer oil futures, but also brokers and trading platforms that offer spot oil, oil CFDs, and even oil options trading.

We have used several parameters to compile this ranking, including:

• Crude oil commissions;
• The oil investment methods offered;
• The quality of the service and platform offered;
• The overall trustworthiness of the broker.

Round-up

Review

How to choose a crude oil trading broker

In order to choose a crude oil trading broker go through these following steps.

First you need to ensure that the broker is regulated by a reputable authority. This ensures that they adhere to specific standards set to protect traders. Regulatory bodies like the Commodity Futures Trading Commission (CFTC) in the US, the Financial Conduct Authority (FCA) in the UK, and the Australian Securities and Investments Commission (ASIC) in Australia oversee broker activities in their respective regions.

Secondly, delve into the oil trading brokers’ offering as many of them offer different account tiers, each with its own set of features, minimum deposit requirements, spreads, and other terms. Ensure that the oil broker supports a range of secure and convenient deposit and withdrawal methods, like bank transfers, credit cards, e-wallets.

Lastly, check for any hidden or additional fees, such as overnight financing or inactivity fees.

Apart from crude oil, see what other commodities or financial instruments the brokerage firm offers if you plan to diversify your trading.

What are the platforms to trade crude oil?

A trading platform, in the context of a crude oil trading broker, refers to software provided by the oil trading broker that allows investors and traders to place and monitor trades in the market.

Considering the most popular trading platforms you can expect to find the following:

• MetaTrader 4 (MT4) for CFDs trading mostly;
• MetaTrader 5 (MT5) allows crude oil trading via futures and options;
• cTrader works mostly with CFDs and often provides Direct Market Access (DMA), meaning traders might get better order execution.

The broker’s trading platform should be user-friendly, stable, and equipped with the necessary tools and features to facilitate trading and analysis.

What are the best demo accounts for crude oil trading?

Two of the best demo accounts for trading oil come from XTB and eToro, which are industry leaders in this aspect. They provide you with an unlimited demo account as it does not expire with time coupled with a virtual balance over $10.000 which you can reset as needed.

An oil trading broker offering a demo account is beneficial, especially for beginner traders. It allows you to practice oil trading with virtual funds, helping you understand the platform and the oil markets without risking real money.

Traders should also consider the quality of the platform, the tools available, the accuracy of price feeds, and the overall user experience. Before committing to a live account, traders should try multiple demo accounts to find the platform and the oil broker that best aligns with their trading style and needs.

How does crude oil trading work?

Crude oil refers to unrefined petroleum and is a naturally occurring liquid fossil fuel. It is a global commodity, and its prices can influence economies, geopolitical relationships, and energy policies.

There are different ways to invest in crude oil:

• Spot Market: crude oil is traded for immediate delivery and payment. Prices on the spot market represent the current market value of crude oil.
• Futures Market: most crude oil trading happens in the futures market. A futures contract is an agreement to buy or sell a specific quantity of crude oil at a predetermined price on a specified future date.
• CFD Market: you can speculate whether the price of the oil CFDs rise or fall without owning the underlying asset.
• Option Markets: traders have the flexibility to devise strategies that consider both price and expiration time of the option. However, these options are based on crude oil futures contracts, not the actual oil.

The two primary markets for crude oil futures are the New York Mercantile Exchange (NYMEX) for West Texas Intermediate (WTI) crude oil and the Intercontinental Exchange (ICE) for Brent crude.

NYMEX is typically open to oil trading Sunday to Friday: 6:00 PM to 5:15 PM Eastern Time (ET) with a 45-minute break each day beginning at 5:15 PM ET. while the ICE goes from Sunday to Friday: 8:00 PM to 6:00 PM ET for the next day.

However, there are times of high volatility when other significant trading hours around the world overlap. Additionally, the oil markets are sensitive to geopolitical events, OPEC meetings, and U.S. crude oil inventory release times that make the price swing.

How does margin and leverage work in crude oil trading?

Margin is the amount of money that a trader must deposit with their broker to open a leveraged position. It acts as collateral or a security deposit against potential losses. This will determine how much capital you need to have in your account to hold a particular position.

Leverage allows traders to control a large position with a relatively small amount of capital. It’s expressed as a ratio, such as 10:1, 50:1, or 100:1, which indicates how many times larger the trader’s position is compared to their margin requirement.

Typically, as a retail trader, you can expect to have available leverage up to 10:1 while trading commodities such as crude oil.

So, if a trader wants to take a position in crude oil worth $10,000 and their broker offers a leverage of 10:1, they would only need $1,000 (the margin) to control that position.

While leverage allows traders to control a larger position with a smaller capital outlay, it also increases potential losses. Ensure you understand the implications and utilize appropriate risk management techniques.

What fees do crude oil trading brokers charge?

Here are some of the common fees associated with crude oil trading:

• Spread: this is the difference between the buying price (ask) and the selling price (bid) of the crude oil instrument. Brokers might offer fixed or variable spreads.
• Commission: some brokers charge a flat fee or a percentage of the trade value as a commission for executing a trade.
• Overnight Financing or Swap Fees: when you hold a leveraged position overnight, you may be charged a fee. This is because leveraged positions are effectively ‘borrowed’ and the fee represents the interest on that borrowed amount.
• Inactivity Fees: if a trader doesn’t trade for an extended period, some brokers charge an inactivity fee.
• Deposit and Withdrawal Fees: while many brokers offer free deposits and withdrawals, some might charge fees.

Fees can vary based on the broker, the type of trading platform, and the specific financial instrument being traded (e.g., futures contracts, CFDs, spot contracts). These can significantly impact your trading profitability.

When choosing a crude oil trading broker, it’s crucial to be aware of all potential fees and costs associated with trading. Always read the terms and conditions and fee schedules thoroughly, and consider testing with a smaller amount or a demo account first.

How do crude oil trading brokers make money?

Crude oil trading brokers employ several methods to generate revenue. These methods can be broadly categorized based on trading-related commissions/fees, non-trading fees, and the inherent business model they adopt.

Trading fees regard the opening and closing of trading positions where spreads and commissions take place. While non-trading fees relate to swap fees, inactivity fees and any deposit/withdrawal fees, if applicable.

Lastly, you have to consider the business model of the broker. Whether it takes the opposite side of a trade, or passes it to liquidity providers depends entirely on the broker. Some may also opt for a hybrid model offering different account types based on these models.

What are the best resources to trade oil?

Here are some of the best resources for crude oil traders:

• Broker Research and Analysis such as XTB and FXCM provide their own analysis for free.
• News websites such as Bloomberg and OilPricecom for up-to-date financial news and analysis.
• Economic calendars available on many financial news websites, providing dates for significant events that might impact the crude oil market.
• Training and courses like Coursera and Udemy or specialized trading education websites on crude oil.
• Books to give you an introduction to the oil market and an historical background such as “The Prize: The Epic Quest for Oil, Money, and Power” by Daniel Yergin or “Oil 101” by Morgan Downey.
• Podcasts and webinars are often hosted by brokers such as IC Markets or IG Markets covering topics on commodities and oil.

Especially for beginners, it’s beneficial if the broker offers educational materials like webinars, articles, tutorials, and more to help you understand the nuances of crude oil trading.

Market Research & Analysis Tools can provide insights into market trends, news, and other factors that can impact crude oil prices. Some brokers offer more in-depth analysis and insights than others.

Trading oil pros and cons

Pros

• Oil is one of the most traded commodities globally, ensuring a high level of liquidity
• There is a range of instruments to choose from to invest in oil
• There is an abundance of resources, analysis, and news available

Cons

• Oil prices can swing dramatically based on geopolitical events
• High Volatility Risks
• Complex market to understand for new traders