What is Brent Crude Oil?
Brent crude oil, also called Brent Blend or London Brent, refers to the oil extracted from the North Sea oilfields Brent, Forties, Oseberg and Ekofisk. This type of oil is characterised as sweet and light, which means it can be easily processed into gasoline and fuel. Brent Oil is light because it has a lower density; the lower level of sulphur makes it sweeter. Brent Crude Oil has lower transportation costs since it is produced near the sea, unlike some of the other types of crude oil.
Brent Crude Oil represents one of the main benchmarks used to set oil prices for the Atlantic basin crude oils. It is also used as a reference to set the price for more than 60 per cent of the internationally traded crude oil. London Brent is traded on the commodities exchanges and it is quoted per barrel of crude oil. One barrel is approximately 159 litres.
Many factors can have a positive or negative impact on Brent Oil price. Supply and demand for crude oil are among the most critical factors: increase in demand can positively affect the oil price when supply is limited. On the other hand, a decrease in demand for oil, as is the case during the coronavirus outbreak, can hurt the Brent crude oil price.
Brent Crude Oil price movements in the past
Crude oil is one of the most actively traded commodities in the world. You can see from the price chart that there were significant fluctuations during the last couple of years. The Brent crude oil price climbed to more than $80 (£64) in September 2018 from $39 (£31) in January 2016. Also, it hit a multi-year low point when the spot price fell below $25 (£20) in March 2020. A combination of decreased economic activity and oil price wars were among eading factors that contributed to the sharp decline in oil prices in 2020.
How to invest in Brent Crude Oil
You can invest in Brent crude oil in numerous ways. One is to go on the Intercontinental Exchange and buy or sell Brent crude futures. Note that the contract size is 1,000 barrels.
Another way of investing in Brent crude oil is using derivative instruments such as options. With a call or put options, you won't have any obligation for delivery of the reference asset, but you will have the right to decide whether to execute the option or not. However, such methods can be time-consuming and may work better for experienced traders.
You could also profit from Brent crude oil price movements by purchasing shares from oil-producing or oil-related companies. But this comes at a risk because many factors can affect the stock value aside from the changes in oil price.
An alternative instrument is through tokenised commodities offered on Currency.com leveraged trading platform. The value of tokenised assets is linked to the value of an underlying asset or commodity. Hence, any change in the reference asset's price is reflected in the value of the tokenised asset. So traders can make profits based on the oil movement without going through the hassle of various contracts or the risks associated with the stocks. Tokenised assets are based on blockchain technology, which is distributed ledger technology, enabling easier data storage and record keeping. The tokenisation of real tradable assets increases the efficiency of trading by lowering transaction costs and improving execution speed.
Trading tokenised Brent crude oil on Currency.com platform overcomes one of the main problems of cryptocurrency owners: the need to sell cryptocurrency if they want to trade other assets. You can buy tokenised commodities with crypto or with fiat money through Currency.com.
Also, you can execute your trading with tokenised assets using the leverage offered by Currency.com. It should be noted that the leverage is quite high since the required margin for tokenised Brent crude oil is only 0.5 per cent, which transfers to leverage of 1:200. It would mean that when traders plan to buy tokenised Brent crude oil worth $10,000 (£8,110) they need to have only 0.5 per cent available capital or $50 (£40). So it is evident that you can trade Brent oil with little money.
Tokenised Brent crude oil trading guide
Trading tokenised Brent oil is easy and, in many ways, the process is similar to trading other types of assets. There are a few basic steps:
- Step 1: Land on Currency.com, sign up for your trading account and go through the two-factor authentication security which enhances the platform safety and protects your personal data;
- Step 2: Choose to trade with crypto or fiat money and transfer the planned amount to your account through one of the multiple methods available;
- Step 3: Define the amount of capital you will dedicate for your Brent crude oil position and don't forget that you will trade on margin which is provided by Currency.com;
- Step 4: You need to choose whether you will speculate on upward movement or downward movement (long or short position) before trading tokenised Brent crude oil;
- Step 5: Currency.com will primarily connect the long and short orders executed on its trading platform and hedge the remaining orders through Capital.com, LMAX Digital as well as orders available on Binance, Bitstamp, Kraken, NASDAQ, NYSE and Gain Capital.
- Step 6: Monitor your positions to choose the appropriate time to close them or you can use the stop loss or take profits orders available on the Currency.com leveraged trading platform.
Why trade tokenised Brent Crude Oil with Currency.com
Brent Crude Oil trading at Currency.com tokenised assets exchange has a number of advantages. Tokenised assets are underpinned by robust and immutable blockchain technology. Opening a trade will give you a token that tracks and moves according to the underlying instrument's price.
- One-stop crypto trading platform
Trade tokenised Brent Crude Oil with Bitcoin or Ethereum. Benefit from the commodity's price movements without turning your crypto assets into fiat.
Trade tokenised Oil-Brent with a tight market spread; benefit from maker rebates and competitive taker fees.
Experienced traders can trade the world's top markets, like Brent Crude Oil, with up to 1:200 leverage.
- Effective risk management
Manage your risks and secure your profits with stop loss and take profit orders. Save your assets with negative balance protection.
We have a scalable and low latency order management system, which can execute 50 million trades per second.
Currency.com operates under new Belarusian regulation with best-in-class AML and KYC laws. Regulatory details and fees are upfront.