Oil trading begins at 22:00 UTC on Sunday when Tokyo traders return from the weekend and NYMEX futures trading opens. But the best time to trade is presumably between 14:00 and 18:00 UTC, as this is when the price is most volatile according to our research.
Oil traders must keep a close track of time due to different reasons. One is market volatility, as oil prices can change rapidly due to geopolitical events, supply and demand fluctuations, and other factors.
Executing timely trades can help traders capitalize on favorable price movements or minimize losses during sudden drops. Order execution economic data released are some of the other factors for which oil traders must stay updated with the timeframe.
This article extensively guides you on the principles of oil trading and the right time.
Can you trade oil 24/7?
No, oil trading typically occurs from Monday to Friday during set trading hours that vary based on the exchange. However, some platforms offer limited after-hours or weekend trading.
Is oil trading available on all broker platforms?
While many brokers offer oil trading, not all allow access to futures contracts on the major exchanges.
How do I find out the latest oil inventory reports?
Traders can check sites like Bloomberg, OilPrice.com or the EIA website for the most recent U.S. crude oil inventory data published weekly by the EIA.
What is contango in the oil market?
Contango refers to the market situation where futures prices are higher than the expected future spot prices, resulting in futures prices increasing as the contract gets closer to expiry.
WTI, Brent, and heating oil are all important commodities in the oil trading industry.
Location: WTI is a light crude oil primarily produced in the United States, specifically in the Permian Basin of West Texas.
WTI is a benchmark for oil prices in North America. The futures contracts that are traded on the New York Mercantile Exchange (NYMEX) for WTI crude oil are widely used to track and speculate on the price of U.S. oil.
Location: Brent crude oil is extracted from several oil fields located in the North Sea, off the coast of Europe. These fields include Brent, Forties, Oseberg, and Ekofisk (the "BFOE" complex).
Brent is a crucial international benchmark for oil prices. Futures contracts for Brent crude are traded on the Intercontinental Exchange (ICE).
Here's a guide to know more about how to trade crude oil on the exchange.
Heating oil, or No. 2 heating oil, is a refined product derived from crude oil. It is used mainly for heating homes and commercial buildings and in diesel engines for vehicles and equipment.
Trading: Heating oil futures contracts are traded on various commodity exchanges, including NYMEX. These contracts enable market participants to hedge against price fluctuations in heating oil.
Heating oil experiences seasonal demand, with higher consumption during the colder months when used for heating purposes.
The best time for trading oil depends on your trading strategy and geographical location. Here are some key points to note:
1. Overlap of Trading Sessions: The most active and liquid times for oil trading usually occur when the major trading sessions overlap. This occurs during the European and North American session overlap, typically from 14:00 to 18:00 UTC. This period often sees increased trading activity and can offer more opportunities.
2. Your Strategy: Consider your trading strategy. As a day trader, you might focus on short-term fluctuations and prefer trading during the most active hours. For example, if the strategy is a breakout strategy, you need an active market (e.g., American session and news-filled background).
3. Risk Tolerance: Higher trading volumes and volatility during peak hours can also indicate higher risk. Ensure that your risk management strategies are in place.
| GMT Time | High-Low |
|---|---|
02:00-06:00 |
0,99 |
06:00-10:00 |
0,98 |
10:00-14:00 |
1,37 |
14:00-18:00 |
1,66 |
18:00-22:00 |
1,45 |
22:00-02:00 |
0,95 |
We have conducted a study in which we analyzed historical oil price data to determine when these price fluctuations are most pronounced. By identifying the specific hours or time periods when oil prices tend to be most volatile, traders and investors can make more informed decisions regarding their intraday trading strategies.
The significance of this information lies in its potential to aid traders in choosing the optimal times to execute trades, depending on their preferred trading approach. For instance:
Trend-following strategies - Traders who employ trend-following strategies seek to capitalize on sustained price movements in one direction. Knowing when oil prices are most volatile can help them identify entry and exit points during these periods, enhancing the effectiveness of their trades
Range trading strategies - Range traders, on the other hand, look to profit from price fluctuations within a defined trading range. Being aware of when volatility tends to peak allows them to time their trades more effectively, potentially leading to better results
The trading hours for oil can vary depending on the particular market and exchange where the oil contracts are traded. Some usual trading hours for some of the significant oil markets are:
WTI Crude Oil: NYMEX trading hours for WTI crude oil futures typically start Sunday evening at 6:00 PM (ET) and continue until Friday at 5:00 PM (ET), with a daily trading halt between 5:15 PM and 6:00 PM (ET).
Brent Crude Oil: Brent crude oil futures contracts on ICE mostly start trading on Sunday evening and continue until Friday evening GMT. Specific trading hours may vary depending on the contract and daylight saving time changes.
The usual trading hours are:
New York: 8:00 PM - 6:00 PM
London: 1:00 AM -11:00 PM
Singapore: 8:00 AM - 6.00 AM
WTI and Brent Crude Oil: SGX offers trading in WTI and Brent crude oil futures. Trading hours are typically aligned with the respective futures exchanges, NYMEX and ICE.
The exchange is open from Monday through Friday from 9:00 AM to 12:00 PM and 1:00 PM to 5:00 PM Singapore Standard Time.
Shanghai Crude Oil Futures (SCF): INE, located in China, offers trading in SCF futures. Trading hours are based on the Chinese market schedule, which differs from Western exchanges.
Heating Oil and Gasoil: LME offers futures contracts for heating oil and gasoil. Trading hours typically follow the LME's trading schedule for base metals.
Trading hours can be affected by holidays, special events, and daylight saving time changes in different regions.
Oil trading is time-dependent for several key reasons:
1. Intraday Volatility: Intraday volatility in oil trading refers to the degree of price fluctuations and price changes that happen within a single trading day for oil contracts.
Oil prices can be highly volatile and change rapidly due to various factors, including geopolitical events, supply and demand shifts, and economic data releases.
2. Time Zones: Time zones are central in determining oil trading times. Here's how:
Global Nature of Oil Trading: Oil is a worldwide commodity, and trading occurs globally in various financial centers. As a result, time zones are essential because they determine when different oil trading hubs are open and active.
Trading Hubs in Different Time Zones: Each trading hub has its trading sessions, such as:
New York (NYMEX): The New York Mercantile Exchange (NYMEX) is a significant hub for oil trading, especially for WTI crude oil futures. NYMEX trading hours are based on Eastern Time (ET) in the United States
London (ICE): ICE trading hours are typically based on Greenwich Mean Time (GMT) or British Summer Time (BST)
Sessions: Trading sessions can also impact oil trading time by defining when markets are open and active. The three usual trading sessions are:
Asian Session: This session includes markets like Tokyo and Singapore and can influence oil trading in the Asian region
European Session: Major oil trading hubs like London are active during this session, impacting oil prices in Europe and beyond
North American Session: The New York Mercantile Exchange (NYMEX) is a crucial player during this session, affecting oil trading in North and South America
The overlap of these sessions creates higher trading activity and liquidity.
Starting to trade oil involves several steps, and it's essential to approach it with careful planning and risk management. Here's a general guide on how to get started with oil trading:
Before you start trading oil, it's necessary to gain an understanding of the oil market, including factors that affect oil prices, supply and demand dynamics, geopolitical events, and market sentiment.Familiarizing yourself with different types of oil is important too.
Next, you need to identify whether you want to trade oil through futures contracts, options, exchange-traded funds (ETFs), or Contract for Difference (CFD) platforms. Each method has its advantages and risks.
Then, comes the essential step of selecting a broker. Select a reputable and regulated broker or trading platform that offers access to oil markets.
This article can help you with in-depth knowledge of the best online brokers for trading.
Develop a clear trading plan highlighting your trading goals, risk tolerance, and strategies.
Deposit the required funds into your trading account. Make sure to start with an affordable amount.
Use risk management tools like stop-loss orders and take-profit orders to decrease potential losses and lock in profits.
👍 Pros of Oil Trading
Trading oil can offer several potential advantages for traders, such as:
• 1. Liquidity: Oil markets are among the world's most liquid, with significant daily trading volumes. This liquidity can make entering and exiting positions easier without substantial price slippage
• 2. Diversification: Oil trading can be a way to diversify an investment portfolio. It can provide an alternative asset class that may not match traditional stocks and bonds, potentially reducing overall portfolio risk
• 3. Global Impact: Oil prices are influenced by geopolitical events, supply and demand dynamics, and economic factors worldwide. This global interconnectivity can provide diverse trading opportunities
👎 Cons of oil trading
Oil trading comes with its share of disadvantages, too. A few of those are:
• 1. Price Volatility: Oil markets are highly volatile, which can lead to rapid and substantial price fluctuations. This volatility can lead to significant losses if not managed properly
• 2. Risk of Losses: As with any trading, there could be a possibility of losing the invested capital. Leveraged products like oil futures can amplify these losses, potentially leading to substantial financial setbacks
• 3. Geopolitical Risk: Oil prices are heavily influenced by geopolitical events, including conflicts, sanctions, and political instability in oil-producing regions. These factors can lead to unpredictable price movements
Before we end the article, here's a guide for you to know today's crude oil price forecast.
Disclaimer:
The exchanges might change the oil trading hours at their discretion. Therefore, when planning exactly when to trade, we recommend you to check the time with the exchange's timetable. You can consult your broker too to find out if you can trade at the time you choose.
Keeping track of trading times and sessions is an important part of successfully navigating the oil markets. As we've explored, oil prices can fluctuate significantly based on worldwide supply and demand factors, so timing your trades during peak volatility windows can make a big difference. While experience and practice are ultimately what will determine your trading results, understanding the overlap between key sessions and when intraday price action tends to be most pronounced are excellent places to start fine-tuning your strategy. Whether you choose to day trade short-term swings or establish longer-term positions, paying attention to oil's global time-dependent nature can help optimize your opportunities. Of course, sound risk management should always accompany your efforts. If approached methodically with the full picture in mind, trading crude oil can offer traders access to an exciting and lucrative commodity market.
A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.
Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.
Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.
A futures contract is a standardized financial agreement between two parties to buy or sell an underlying asset, such as a commodity, currency, or financial instrument, at a predetermined price on a specified future date. Futures contracts are commonly used in financial markets to hedge against price fluctuations, speculate on future price movements, or gain exposure to various assets.
Risk management is a risk management model that involves controlling potential losses while maximizing profits. The main risk management tools are stop loss, take profit, calculation of position volume taking into account leverage and pip value.
Upendra Goswami is a full-time digital content creator, marketer, and active investor. As a creator, he loves writing about online trading, blockchain, cryptocurrency, and stock trading.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).
