Advantages and disadvantages of spot markets

As we mentioned earlier, spot markets are short-term markets. When we operate with oil, we talk less and less about long-term trading. The advantage of a system of this type is the availability of this oil throughout the world and independently of the country of origin. On the other hand, this system prevents small companies from modifying oil prices with the aim of generating personal benefits. In addition, the spot markets are increasingly reactive to different events, like the rest of the financial markets. Its volatility is, therefore, increasingly important due to the fears generated by certain news items that sometimes have not been verified. Indeed, the fear of oil shortages, which regularly cause prices to rise, is what causes these fears.

Operate in the spot markets

Of course, you can not directly intervene in the oil spot market unless you are a major industrialist or an institutional investor. This does not mean, however, that oil cannot be operated and capital gains can be exploited by speculating on the rise in prices.

financial markets

For this,  you simply have to go through an intermediary, also called a broker or broker, who puts trading tools at your disposal within an online platform. These   contracts for difference, meanwhile, do not propose to buy barrels of oil, but speculate with the price of oil in one or more of the spot markets. So, some brokers will propose to operate WTI oil and others Brent oil.

 However, we must be careful because depending on the type of oil that operates with the CFD, the indicators that must be followed will not be the same. An increase or decrease in, for example, the reserves of US oil, will have a very slight influence on the Brent, while the influence on the WTI will be very important.