Oil is one of the energy commodities in the commodity market where you need to handle large amounts of crude oil to trade in the oil market. And oil futures are contracts just like equity futures where you come to an agreement to buy or sell a specified commodity, in this case, Oil for a future date at an agreed price.
In short, in oil futures, the underlying security is oil instead of equity share. Otherwise, rests are same as in equity futures such as market lot, expiry day, and unit of price quotation, tick size and price of settlement.
How is it works?
For your information, the oil futures traded in commodity exchanges like Australian Securities Exchange (ASX) and Multi-Commodities Exchange (MCX) etc. In oil futures, one can speculate on future price of oil without buying and selling the oil itself.
So, instead of buying crude oil, storing it, waiting for its price to increase and then selling it by arranging for it to be delivered, you can actually buy a future contract and then sell the contract before its expiry.
The oil futures traded on commodity exchanges in the form of oil benchmarks just like equities traded on stock exchanges.
If you are an equity investor and planning to trade in oil commodity or other commodities then I would recommend you to opt for professional advisory services. Better try out the Advisorymandi stock market app. This app is not limited to equity investors but also to commodity and currency investors and traders as well. Whether you are in intraday, positional or weekly trades, it is the one-stop destination for you. It is because oil is high-leveraged market. One could loss more than the amount he/she initially invested.
