It's also continues to be a very popular market with traders, but there are different types of oil you can trade.

The two main type types are Brent crude on the US version West Texas Intermediate.

So which one should you be following wider traders like this?

Let's get into it straightaway.

Let's start off by looking at the differences between these two markets.

What drives the price, and then we'll jump on the charts to look at typical volatility.

Let's find out a little bit more about these two, the two most popular grades of oil when it comes to trading. 00:00:53.230 --> 00:01:2.760 So there's brain crude oil, which we could refer to expose as the UK version and then West Texas Intermediate, which is the oil produced in the U. 00:01:2.760 --> 00:01:3.150 S. 00:01:3.530 --> 00:01:8.930 There are some technical differences between these two types in quality on their makeup. 00:01:8.930 --> 00:01:12.750 Brent, for example, has the higher self content.

Brent pricing sets the standard for around 2/3 of world production.

So I suppose if we were gonna pick what's this slightly more important market here?

This line here suggests that we should be leaning Maur towards Brent pricing, but when it comes to trading, it's completely up to you.

Which one you trade, whereas W.

T.

I, as its name suggests, West Texas into media produced in the U.

S.

So that is the benchmark for US crude or production When it comes to pricing, Broadly speaking, W.

T.

I.

The US version is better for petrol production. 00:01:54.000 --> 00:02:5.140 Brent tends to be better for diesel fuel production historically, and at the moment, Brent usually trades at a premium to W. 00:02:5.140 --> 00:02:5.490 T. 00:02:5.490 --> 00:02:5.690 I. 00:02:5.690 --> 00:02:14.880 So it tends to be priced slightly higher in the market in the West Texas intermediate grade of oil.

But they do tend to move in lockstep.

You know, if we saw 10% rally in the price of Brent would expect to see the price of W.

T.

I move a similar amount.

We're gonna get into the charts in a minute and have a look at the typical volatility.

Before we do that.

Let's just talk a little bit about what drives the price off both of these grades of world.

Clearly, oil is an incredibly important commodity for the world economy, so the state of that global economy we'll have a major factor on fluctuations in the old price. 00:02:53.840 --> 00:03:0.460 When the economy is booming, factories are at full capacity, churning out goods that getting shipped around the world. 00:03:1.290 --> 00:03:8.160 Clearly, there's a lot of demand for oil, so it expect the price to rise in the good times. 00:03:8.420 --> 00:03:16.890 If we saw AH global recession or a drop off in global growth factory production, Industri production slows down.

There's gonna be less demand for a while, so that's a simple supply and demand equation.

Less demand normally means the price would start to tail off.

So the global economy on things like trade wars are a big factor when it comes to the price of all.

Then, of course, there's there's political uncertainty.

Oil is produced in various regions around the world. 00:03:39.980 --> 00:04:2.820 If there is ah, war, for example, let's let's go back to the first Gulf War in the 19 nineties, you know, we saw the price of oil source so major instabilities such as that, or just general political uncertainty in a certain area which could have an impact on supply clearly is gonna affect the price of all. 00:04:3.100 --> 00:04:4.750 And it is all about supply as well. 00:04:4.750 --> 00:04:20.580 You know, for example, if we had OPEC, the cartel of oil producing countries in the Middle East, if they decide thio either dial down the taps or increased supply, that's gonna have a knock on effect fairly quickly on the old price.

So factors like that our watch.

If there may be concerns that prices are slipping that maybe they'll take a step back and try and reduce that supply to prop up the price.

So all of these three sort of major factors can have massive impacts on what's going on with your price price, but in the short term, but also over the longer term as well.

For example, if we had a protracted economic slowdown, you'd expect the price of world toe have a significant downtrend. 00:04:53.040 --> 00:05:1.240 Let's get into the markets and look at these two grades of oil in a bit more detail, so they start off by looking at Brent crude. 00:05:1.250 --> 00:05:11.420 So I've got the chart here going back about six months or so we had lows for Brent crude late 2018 just ahead of $50 a barrel.

Traded as low as $50.

42.

Then we saw a recovery up above 74 the price actually trading upto 74 73 on the moment at the time, recording its trading just above $60 a barrel.

Let's have a look at W.

T.

I.

U s soil for a comparison and over the same time period here is tthe e u S w t I oil.

You can see late 2018 traded as low as 42 $33 a barrel, pushed as high in April upto 66 55 it's currently trading up $52 a barrel.

It's around about $8 less than the US, the UK Brink crude version. 00:05:55.050 --> 00:06:0.140 So there is that difference in the spread, but you can see that it moves the price of oil moves. 00:06:0.140 --> 00:06:3.470 Whichever great we're looking at moves in a similar fashion. 00:06:3.620 --> 00:06:8.720 So I jump back onto the Brent crude chart for now, just to show what why traders like this market. 00:06:8.730 --> 00:06:9.810 It's the volatility. 00:06:9.900 --> 00:06:19.580 It's a major world commodity looking the move October 2018 Brent crude trading up above $86 a barrel.

And then we had that low in December, down around about 50.

That's a significant move that into 2018 a significant bounce back recovering pretty much 50%.

So a massive Ronnie.

So we see big swings over the medium to long term, depending on what's going on with supply on the economy.

But if we change this to a short term chart and we look at just the last couple of days or so, you know again, we've seen Brandt crude trade as high as what 60 to 40 a barrel and then slip below $60 a barrel. 00:06:58.960 --> 00:07:9.250 So again, Maur than $2 move over a couple of days, and it's this sort of volatility short, medium and long term. 00:07:9.530 --> 00:07:18.460 That means oil is likely to continue being a really popular market for short term traders all around the world.

When it comes to trading thes markets with capital dot com, it's really straightforward.

Let's do something on Brent Oil.

Let's say we think that actually the selloff has been overdone.

Down to 60 we want to put a stop loss the other side of these lows.

Maybe our stop goes in at 59 60.

That's place to trade.

By pressing by, we can choose how large or have small to trade.

I'm gonna trade the smallest I can hear nor 0.1.

Just as an example, I'm gonna set my stop loss up trying to say a stop at 59 50.

So I'm gonna click close at a loss and then just simply choose my price. 00:07:57.590 --> 00:08:0.830 Put 59 50 and and that's it. 00:08:1.030 --> 00:08:1.740 I'm ready to go. 00:08:1.740 --> 00:08:2.940 So I'm trading really small. 00:08:2.940 --> 00:08:3.180 It's on. 00:08:3.180 --> 00:08:5.810 My margin requirement is fairly tiny. 00:08:5.820 --> 00:08:8.420 It's only 47 pence on my account. 00:08:8.420 --> 00:08:14.110 I'm gonna buy wherever the prices trading on clothes with a stop loss of 59 50.

So once already a click on by on my trade is done, you can see there in the bottom left the confirmation on DATs it.

I've bought oil.

If I click on port failure, there's an old trading there from before.

I think my move.

Doing a session on uber on.

There's my Brent crude oil buying at $60 on 46 cents a barrel.

So it's Azizi.

Is that if I change your mind.

I want to come out the trade click on close on.

The trade will be closed, so Brent crude is arguably slightly more important of the two.

But from a trading point of view, I don't think it makes that much different.

When we saw when we looked at those longer term moves, so we can see they do tend to move even other different prices. 00:08:58.520 --> 00:09:9.710 They do, of course, move in a similar way, and they're likely to remain incredibly popular with traders around the world because they do reflect what's going on in the global economy. 00:09:9.900 --> 00:09:10.870 We'll wrap things up there.

But to find out more about trading and crude all go to our website capital dot com to never miss out on updates about oil and other markets, indices and currencies.

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