Why Trade Global Oil Contracts?
New Ecosystem of Contracts
Hedges Against End-User Prices
Industry Quality Data: Flux
Macro & Technical Analysis
How to Trade Global Oil at Onyx Markets?
| Spreadbetting | CFD |
| Traded In | $ Per Point | Contracts |
| Benefits | Profits are tax free1, Can go long or short | Losses can be offset again your tax1, May be easier to understand especially for new traders, can go long or short |
| Costs | Spread and currency fees | Spread and currency fees |
| Platforms | Onyx Markets MT5 (desktop) MT5 (mobile and MT5 Webtrader) | Onyx Markets MT5 (desktop) MT5 (mobile and MT5 Webtrader) |
What is Global Oil?
Global oil at Onyx Markets is an ecosystem of CFDs and spread betting contracts that track the financial oil market. This includes not just traditional oil contracts like Brent and WTI, but also the critical oil swaps market.
The oil swaps market is the wholesalers market that is used to set the price for the end user physical oil products you consume every day, in many different regions around the world. This includes contracts like Japanese Naphtha, European Jet Fuel, Singapore Shipping Fuel and Saudi Arabian Propane, but also the traditional contracts like crude, gasoline and diesel, but in not just one region.
How Is the Financial Oil Market Used by the Oil Industry?
Traditional financial oil contracts like Brent, WTI, RBOB, Gasoil and Heating Oil that are already available to the retail community and are mostly speculative contracts that reflect physical oil around 2 months into the future and in very limited regions. They are very important contracts for liquidity and initial price discovery, but there is another layer of pricing that differentiates from these contracts that sets the real price of oil products around the world.
Because of the use of oil swaps ecosystem to set prices in the physical world, these contracts are incredibly important to the industry, and play a significant part in how the physical world operates.
Price Discovery: Financial Oil
Onyx Markets enhances oil market transparency by democratising access to market liquidity through its platform, which streams Onyx’s own real-time price quotes, as a value-added service for active accounts. As an oil swaps liquidity provider, the firm bridges retail and wholesale participation by offering tight spreads derived from its interbank-grade market-making operations, ensuring price discovery reflects flows without disadvantaging participants. By replacing opaque pricing models with executable quotes, Onyx reduces information asymmetry. The platform’s open-access approach— providing millisecond pricing updates, positioning dashboards, and research previously restricted to corporates — empowers users to trade oil CFDs and Spread Bets.
Hedging: Oil Price Protection
Hedging is a crucial practice in the oil industry, allowing companies to secure future oil prices and manage risk. It involves using financial contracts that closely mirror the physical oil being produced or consumed. Oil swap contracts are particularly effective for hedging, as they track the future price of physical oil assessments. Various players in the oil industry utilise the oil swaps market for different purposes:
- Producers: use it to secure future selling prices for their oil.
- Consumers: employ it to lock in future buying prices.
- Refiners: leverage it to manage their input costs and output prices.
- Oil Traders: use swaps to protect trade margins on transactions involving moving oil globally or placing it in storage.
By using oil swaps, these market participants can effectively manage their exposure to price fluctuations, creating a more stable and predictable financial environment for their operations. This practice is fundamental to risk management in the volatile oil market, allowing companies to focus on their core business activities with greater confidence in their future financial positions.
Speculation: Investing in Oil Price Variations
The oil swaps market has evolved into a powerful tool for both hedging and speculation, bridging the gap between physical and financial oil markets. It allows producers, consumers, and traders to manage price risks effectively, with contracts often tracking physical oil prices. Simultaneously, it has opened doors for speculative traders and investors to gain exposure to oil prices without dealing with the actual physical commodities and the risk that brings. This market’s growth has increased liquidity and price discovery efficiency, while also potentially introducing new sources of volatility. Currently dominated by voice trading, the oil swaps market presents significant opportunities for expansion, particularly in algorithmic and technical trading. As it continues to develop, it’s likely to play an increasingly crucial role in shaping global oil price dynamics.
Citations
- [1] Tax regulations are subject to change
Global Oil Contracts
