Energies
The energy markets are some of the most interesting, and exciting markets around. Trading CFDs on 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 specialised knowledge. Stick with the liquid markets and trade popular energy products.
Popular CFDS on Commodities Contracts
The most popular CFDs on energy contracts for traders are as follows:
- West Texas Intermediate (WTI) Crude Oil
- Brent Crude Oil
- Gasoline
- Natural Gas
Most forex traders 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., Gasoline prices are usually rising in summer because of the 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 may also see geopolitical movements in crude oil. For example, Middle 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 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.