in this video we're gonna look at the
two most popular types of oil and which
one you should be focusing on if you're
trading these markets hello I'm David
Jones from capital comm now we all know
that oil is an incredibly important
world commodity 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 and the US version West
Texas Intermediate so which one should
you be following wider traders like this
let's get into it straight away 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 so there's
Brent crude oil which we could refer to
as opposed as the UK version and then
West Texas Intermediate which is the oil
produced in the US there are some
technical differences between these two
types in quality and their makeup Brent
for example has the higher sulfur
content brent pricing sets the standard
for around two thirds of world
production so I suppose if we were going
to pick what's the slightly more
important market here this line here
suggests that we should be leaning more
towards Brent pricing but when it comes
to trading it's completely up to you
which one you trade
whereas WTI as its name suggests West
Texas Intermediate produced in the u.s.
so that is the de benchmark for US crude
oil production when it comes to pricing
broadly speaking WTI the US version is
better for petrol production brent tends
to be better for diesel fuel production
historically and at the moment brent
usually trades at a premium to WTI so it
tends to be priced slightly higher in
the market than the West Texas
Intermediate
of oil but they do tend to move in
lockstep you know if we saw a 10% rally
in the price of Brent and we'd expect to
see the price of WTI move a similar
amount we're going to 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 of both of these grades
of oil clearly oil is an incredibly
important commodity for the world
economy so the state of that global
economy will have a major factor on
fluctuations in the oil price when the
economy is booming factories are at full
capacity churning out goods they're
getting shipped around the world clearly
there's a lot of demand for oil so it
expect the price to rise in the good
times if we saw a global recession or or
a drop-off in global growth factory
production industrial production slows
down there's gonna be less demand for
oil so that's a simple supply and demand
equation less demand normally means the
price would start to tail off so the
global economy and things like trade
wars are a big factor when it comes to
the price of oil then of course there's
there's political uncertainty you know
oil is produced in various regions
around the world if there is a war for
example let's go back to that the first
Gulf War in the 1990s you know we saw
the price of oil soar so you know major
instabilities such as that or just
general political uncertainty in a
certain area which could have an impact
on supply
clearly it's going to affect the price
of oil and it is all about supply as
well you know for example if we had OPEC
the cartel of oil-producing countries in
the Middle East if they decide to either
dial down the taps or increase supply
that's gonna have a knock-on effect
fairly quickly on the oil price so
factors like that are watch if there may
be concerns that
is slipping and 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
the oil price price both 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 oil to have a significant downtrend
let's get in to the markets and look at
these two grades of oil in a bit more
detail so let's start off by looking at
Brent crude so I've got the chart here
going back about six months or so we had
lows for Brent crude of late 2018 just
ahead of $50 a barrel traded as low as
$50 42 then we saw a recovery up above
70 for the price actually trading up to
74 73 and at the moment at the time
recording its trading just above $60 a
barrel let's have a look at WTI US oil
for a comparison and over the same time
period here is the u.s. WT aisle you can
see late 2018 traded as low as 42 $33 a
barrel
pushed as high in April up to 66 55 and
it's currently trading up 52 dollars a
barrel so it's around about 8 dollars
less than the u.s. the UK Brent crude
version so there is that difference in
the spread but you can see that it moves
the price of oil moves whichever grade
we're looking at moves in a similar
fashion
so I've jumped back on to the Brent
crude chart for now just to show what
why traders like this market it's the
volatility it's a major world commodity
look at the move October 2018 Brent
crude trading up above eighty six
dollars a barrel and then we had that
low in December down around about 50 so
that's a significant move then into 2018
a significant bounce back recovering
pretty much 50% so a massive rally so we
see big swings over the medium to longer
term you know depending on what
going on with supply and 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
Brent crude trade as high as what 60 to
40 a barrel and then slip below $60 a
barrel so again you know more than $2
move over a couple of days and it's this
sort of volatility short medium and long
term 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 these
markets with capital com
it's really straightforward let's do
something on Brent oil let's say we
think that actually the sell-off has
been overdone down to 60 we want to put
a stop loss the other side of these lows
may be our stock goes in at 59 60 let's
place the trade by pressing buy we can
choose how large or how small to trade
I'm going to trade the smallest I can
here nor point one just as an example
I'm going to set my stop-loss up so I'm
going to say a stop at 59 50 so I'm
gonna click close at a loss and then
just simply choose my price put 59 50 in
and that's it
I'm ready to go so I'm trading really
small here so my margin requirement is
fairly tiny it's only 47 pence on my
account I'm gonna buy wherever the price
is trading and close with a stop loss of
59 50 so once I'm ready I click on buy
and my trade is done you can see there
in the bottom left the confirmation and
that's it I've bought oil if I click on
portfolio there's an old trade in there
from before I think when we were doing a
session on uber and there's my Brent
crude oil buying at 60 dollars and 46
cents a barrel so it's as easy as that
and if I change your mind I want to come
out the trade click on close and the
trade will be closed so Brent crude is
arguably is slightly more important of
the two but from a trading point of view
I don't think it makes that much
difference you know when we saw when we
looked at though
longer-term moves you know we can see
they do tend to move even other
different prices they do of course move
in a similar way and they are likely to
remain incredibly popular with traders
around the world you know because they
do reflect what's going on in the global
economy we'll wrap things up there but
to find out more about trading and crude
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