Oil Market Fundamentals

WTI vs Brent

There are two main crude oil benchmarks: West Texas Intermediate (WTI), priced in Cushing, Oklahoma, and Brent Crude, sourced from the North Sea. Both track global oil prices but can trade at different levels due to regional supply and demand differences. Most brokers offer CFDs on both.

Brent is generally considered the global benchmark, while WTI is the primary US benchmark. Price movements between the two are highly correlated but not identical.

Supply-Side Drivers

Oil supply is influenced by OPEC+ production decisions, US shale output, geopolitical disruptions in producing regions (Middle East, Russia, Nigeria), and infrastructure capacity. When OPEC cuts production, supply tightens and prices tend to rise. When they increase output or when US production surges, prices tend to fall.

Weekly US crude inventory data (published every Wednesday by the EIA) is one of the most watched oil market reports. A larger-than-expected build in inventories signals weak demand; a drawdown signals strength.

Demand-Side Drivers

Oil demand is driven by global economic activity. Industrial production, transportation, manufacturing, and seasonal heating/cooling all contribute. Economic slowdowns reduce demand; recoveries increase it. China, the US, and India are the largest oil consumers, so economic data from these countries has an outsized impact.

Trading Oil CFDs

Oil is popular with CFD traders because it trends well, responds strongly to identifiable catalysts, and offers good intraday volatility. However, oil prices can also be highly unpredictable — a surprise OPEC announcement or geopolitical escalation can move prices 5%+ in hours.

Tight risk management is essential. Use stop-losses, be aware of scheduled inventory reports, and monitor OPEC meetings closely.