Best Oil Trading Brokers in Singapore

Oil: Volatility at its best

Crude (unrefined) oil is extracted from hydrocarbon deposits and other organic materials and refined to produce usable products, such as gasoline, diesel, petrochemicals (basically plastics), fertilisers, and even medicine. This implies that this raw material's versatility is the basis, heart, soul, and blood of the world economy: for better or worse, the world would not be the same without oil. This is why oil prices have a massive impact on the global economy. It is a two-way, positively correlated relationship: economic data affects oil prices, and oil prices affect economic data.

If a regular investor wants to invest in Oil or Gas, they can't just go to a rig with a bag of cash asking to share the profits. The easiest way to start trading in the oil markets is via CFDs [We will briefly explain what CFDs mean later]. The two most common investment instruments with CFDs are Brent Oil and WTI (West Texas Intermediate). The core price measurement units are crude oil barrels available on the main energy markets. A trader can also trade on this raw material through gasoline prices or the commodity known as Heating Oil, which is refined oil ready for use.

CFD stands for Contracts for Difference. They are financial instruments allowing 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 oil barrel price, without the need to trade in physical oil, in other words, to travel to Texas or Saudi Arabia and acquire the equivalent in barrels. It is then an efficient way to invest in oil if you believe that trading on its price rise and fall might be a good option for your investment portfolio.

What's the minimum amount to invest in Oil-related financial instruments?

Many Brokers do not require a minimum deposit (or a meagre one). Many others do not charge a commission for the purchase and sale of Commodity CFDs. So, you do not need to be an investment banker to start trading oil-related assets.

How to open an Account to invest in Oil and Gas

Opening an investment account with any of the brokers listed above takes only a few minutes. To start trading oil assets, you will have to:

1. Choose the trading platform that suits you best (We have certified with the ones that we have included that accept local clients).

2. 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.

3. The Broker will require you to upload an ID or passport and proof of address (electricity, water bills, etc.).

4. Once the account has been approved and is ready to be used, deposit funds. The methods for depositing and withdrawing money are usually Credit Cards, Bank transfers, or e-wallets (such as PayPal, Paysafecard, Skrill, SafetyPay, Neteller, among many others).

It is vital to note that most trading platforms offer a free demo. In other words, you may open a demo, test the platform, and then decide whether to deposit funds or not. And remember: some brokers offer real accounts with no minimum deposit.

How do you invest in an Oil financial instrument?

The trading platforms allow investing in these instruments through optimised apps that grant access to financial markets. Most platforms resemble a social network or any other mobile app: Their design is engineered so the investor can learn and start trading very quickly, with little prior financial knowledge (not recommended, though). There are three basic ways to invest in oil and gas CFDs:

1. CFDs on WTI or Brent Oil: This way implies that you acquire a CFD, that is, the derivative on the equivalent of an oil barrel. The physical raw material is never purchased; it is only a speculative bet on the oil price.

2. ETFs: Another option is to trade CFDs on listed funds or ETFs. By investing this way, you acquire a portfolio of companies and financial assets in the energy sector. Which one to choose? In the case of crude oil, there is an infinite number of options: 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. Also, many ETFs invest in companies that drill and refine oil and oil-related products.

3. Stocks and Shares: The last option is to trade CFDs on shares of companies directly or indirectly related to crude oil—for example, BP, Shell, Exxon, Pemex, or Total shares, among many others.

To acquire any of these financial instruments related to oil, an investor has to:

1. Open an account with a Broker,

2. Deposit money with any of the available payment methods,

3. Search for "Oil" or "Gas" on the Broker platform, choose the financial instrument, and

4. Press the "Buy" button.

And, done: you are officially an investor in energy-related financial instruments.