Oil and gas prices rise when the economy is doing well: more energy is needed to produce goods and services. It also goes up in price when there is a supply disruption: wars, terrorist attacks, a major spill in a major well. Oil falls in price when the economy goes bad: less energy is needed to produce the goods and services we consume. It also drops in price when production (supply) increases or stocks increase. With the coronavirus pandemic, we've seen several of these effects, altogether. These are just a few examples that show that volatility in the price of oil can be massive and price levels depend on many factors. This is why investing in oil through CFDs can become a lucrative activity. Below, we explain the process to invest in oil & gas through CFDs from Georgia, for investors with little capital [Little capital = less than 100-200 US Dollars]. We add below a list of investment platforms to easily start investing.
Oil and Gas CFD Brokers available in Georgia
To start with, here is a few of the best CFD Brokers that offer the most popular trading platforms for financial instruments that replicate oil and gas prices, linking to our review. All of these are trading platforms offering CFDs on Oil, Gas and energy related ETFs and Shares:
Oil CFDs: Volatility at its best
Crude is unrefined oil, is basically made up of hydrocarbon deposits and other organic materials, which can be refined to produce usable products, such as gasoline, diesel, petrochemicals (such as plastic), fertilizers, and even medicine. Due to the versatility of this raw material, it is the basis, heart, soul and blood of the world economy: For the better and for the worse, the world would not be the same if oil wasn't available. This is why oil price's impact on the global economy is massive, and it is a two way correlated relationship, economial data is directly related to oil price and vice versa.
When speaking about oil investing, the two most common ways of investing with CFDs are through Brent Oil and WTI (West Texas Intermediate), which are the two main price measurement systems: crude oil barrels available on the main energy markets. In addition, a trader can also operate on this raw material through the prices of Gasoline or the commodity known as Heating Oil, which are basically oil, but refined.
As the reader of this article probably knows, CFD stands for Contracts for Difference, that is, a financial instrument that allows you to trade changes in the price of futures and options, but with the simplicity of not needing to manage complicated oil contracts. A CFD on oil then replicates the price of oil, without the need to trade in physical oil, in other words, to travel to Texas or Saudi Arabia and literally buy barrels of oil. It is then obviously an efficient way to invest in oil, in the event that you would understand that trading on the rise and fall of the price of this raw material might be a good option for your investment portfolio.
But I am not an experienced Trader... How do you invest with an Oil CFD?
Trading platforms offered by Online Brokers allow investing in this type of instruments in a very simple way through optimized apps that grant access to financial markets for the general public. In fact, most platforms resemble a social network or any other app on a mobile device: Apps are designed so that the investor can learn and start trading very quickly, without the need for much prior knowledge. There are 3 basic ways to invest in oil and gas CFDs:
CFDs on WTI or Brent Oil: The perfect instrument for all types of traders, since they allow trading oil prices with a very low capital requirement. The physical raw material is never purchased, it is only a speculative bet on the oil price.
CFDs on ETFs: Another option is to trade CFDs on listed funds or ETFs. In the case of crude oil, there are an infinite number of options, among others is the United States Oil Fund (USO), for the barrel of WTI, or the Brent Oil Fund (BNO) for the barrel of Brent, but there are many other options.
CFDs on Stocks and Shares: The last option is to trade CFDs on shares of companies directly or indirectly related to crude oil. For example, on the shares of BP, Shell, Exxon, Pemex, Total, among many others.
In order to acquire any of these CFDs with exposure to oil [or to any other raw material or stock on the Stock Market], a trader has to:
open an account with an Online Broker,
deposit money with a credit card [or any other of the available payment methods],
search for "Oil" or "Gas" on the Broker platform, choose the financial instrument, and
press the "Buy" button.
Done: you are officially and investor in energy related financial instruments.
But I don't have a large bank account… Can I still invest?
The answer to this question is a resounding Yes: Many Brokers do not have a minimum deposit (or it is a very low amount of money), and many others do not charge a commission for the purchase and sale of Commodity CFDs.
How to open an account to Invest in Oil and Gas CFDs
Opening an investment account with any of the Online Brokers that were detailed above is a process that is carried out online and takes only a few minutes: it only requires: (a) an identity document or passport and (b) a proof of address (electricity, water bills, etc.), which are scanned through the Broker app or sent via email. The methods of depositing and withdrawing money are usually:
e-Wallets (Like PayPal, PaySafe, Skrill, SafetyPay, Neteller among many many others)
Available options to deposit and withdraw funds in and from the investment account will depend on the Broker with which the account was opened. It is important to mention that most Online Brokers allow you to use a Free Demo of their trading platform. In other words, a trader can open a Demo account, test the platform, and then decide whether to deposit funds or not. And remember a very interesting fact: To open a Real Money account, with some Brokers only 1 Dollar is required. Depending on the Broker, accounts may be opened in US Dollars (USD), Euros (EUR), Pound Sterling (GBP), Swiss Franc (CHF), Australian Dollar (AUD) as the base currency. Most of them offer the option to open the accounts in either Dollars or Euros.