Crude Oil Trading in India (2025): Beginner to Advanced Guide

Introduction: Why Crude Oil is Called Black Gold

Crude oil has shaped the modern world more than almost any other natural resource. It fuels our cars, airplanes, ships, and trains. It powers industries, generates electricity, and even provides the raw material for plastics, fertilizers, cosmetics, paints, and countless household items.

Without crude oil, the modern lifestyle we take for granted would look very different.

This is why crude oil is often called “black gold”. Just as gold has historically been a symbol of wealth, crude oil has become a cornerstone of economic power and global politics.

• 🌍 Countries that produce oil (like Saudi Arabia, Russia, and the U.S.) gain enormous influence on global affairs.

• 📈 Countries that consume heavily (like India, China, Japan) depend on oil imports, making their economies sensitive to price swings.

• 🔀 Traders and investors see crude oil as one of the most exciting and volatile commodities, creating opportunities for both profit and loss.

 

Why Crude Oil is Crucial for India

India is the third-largest oil consumer in the world, after the U.S. and China. However, unlike the U.S., India produces only a small fraction of its oil requirement.

• India imports ~85% of its crude oil needs.

• Even a small increase in international oil prices directly impacts India’s trade balance, currency (INR), and inflation.

• For example, when crude oil prices rise:

  • Petrol and diesel become more expensive → transportation costs rise.

  • Higher transport costs push up food prices → inflation increases.

  • Government subsidies on fuel increase → fiscal pressure builds.

  • Stock market reacts → airline and transport stocks may fall.

👉 In short, crude oil prices have a direct link to the cost of living, stock markets, and overall economy of India.

For traders, this means:

• Volatility = opportunity.

• Understanding crude oil can help you anticipate broader economic shifts.

 

A Brief History of Oil (Global Context)

To understand oil trading, it helps to know how oil shaped the modern world.

• 1859: The first commercial oil well was drilled in Pennsylvania, U.S.

• 1900s: Oil-powered cars and airplanes took off → demand exploded.

• 1973: OPEC (Organization of Petroleum Exporting Countries) imposed an oil embargo → global oil crisis, prices quadrupled.

• 2008: Oil hit a record ~$147 per barrel before crashing during the financial crisis.

• 2020: COVID-19 demand collapse led to a historic moment — U.S. WTI crude futures went negative (traders were paid to take delivery!).

Each of these events showed how geopolitics, supply-demand, and global crises can shake oil markets dramatically.

What Exactly is Crude Oil?

At its core, crude oil is a natural fossil fuel formed over millions of years from the remains of plants and animals buried under heat and pressure.

• It is a mixture of hydrocarbons (molecules made of hydrogen and carbon).

• Crude oil is not uniform — it varies in thickness, color, and sulfur content.

Types of Crude Oil

1. Light Sweet Crude

   • Flows easily, low sulfur.

   • Cheaper to refine into petrol and diesel.

   • Example: WTI (West Texas Intermediate).

2. Heavy Sour Crude

   • Thick, high sulfur.

   • Requires more processing, costlier to refine.

   • Example: Venezuelan or Canadian crude.

Refining Crude Oil: What Comes Out of 1 Barrel?

One barrel = 159 liters (42 gallons) of crude oil.

Typical breakdown after refining:

👉 So when you trade crude oil, you’re essentially trading the fuel of the modern economy.

Global Benchmarks: WTI, Brent, Dubai Crude

Since crude oil comes in many types, traders worldwide use benchmarks as pricing references.

1. WTI (West Texas Intermediate)

   • U.S. benchmark.

   • Light and sweet, considered high quality.

   • Traded on NYMEX (New York Mercantile Exchange).

2. Brent Crude

   • North Sea benchmark (Europe).

   • Global reference price (used for ~65% of world’s oil contracts).

3. Dubai/Oman Crude

   • Used for pricing oil exports to Asia (India, China, Japan).

💡 For Indian traders on MCX, Brent crude is most relevant since most of India’s imports are linked to it.

 

If you are new to commodity trading then do check this post and learn the basics of Commodity Trading in India: A Beginner’s Guide to Earning from Gold, Oil & More

Physical Oil vs Paper Oil Trading

Before learning MCX trading, let’s clear a common confusion.

🔹 Physical Oil Trading

• Involves actual barrels of oil, storage, shipping.

• Done by refiners, airlines, oil companies.

• Example: Indian Oil Corporation imports crude, refines it, and sells petrol/diesel.

🔹 Paper Oil Trading (Futures & Options)

• Involves contracts whose price is linked to crude oil.

• No need to handle physical oil.

• Traders buy/sell contracts on exchanges (like MCX in India).

• 99% of retail traders use paper trading.

👉 For beginners, paper contracts = your entry point into crude oil trading.

MCX: India’s Gateway to Crude Oil Trading

The Multi Commodity Exchange (MCX) is India’s largest commodity exchange.
Crude oil is one of its most liquid and actively traded contracts.

Main Contract Types on MCX

1. Crude Oil Futures (Big Contract)

   • Lot Size: 100 barrels

   • Tick Size: ₹1

   • Value per Tick: ₹100

   • Margin: ~15–20% of contract value

2. Crude Oil Mini Futures

   • Lot Size: 10 barrels

   • Tick Size: ₹1

   • Value per Tick: ₹10

   • Margin: ~15–20% of contract value

📌 Beginners usually start with Crude Mini because:

• Lower capital required.

• Smaller risk per tick.

 

Trading Hours on MCX

• Monday–Friday: 9:00 AM to 11:30 PM

• During U.S. daylight savings: till 11:55 PM

This long trading window allows Indian traders to react to global market news in real time (since most oil price action happens during U.S. hours).

Example: How MCX Margin Works

Suppose crude oil price = ₹6,500 per barrel.

• Crude Mini Contract = 10 barrels = ₹65,000 value.

• Margin (20%) = ₹13,000 only to trade 1 lot.

If price rises by just ₹100 per barrel:

• Profit = (₹6,600 – ₹6,500) × 10 barrels = ₹1,000.

📌 That’s nearly 7.7% return on ₹13,000 margin in a single move.
But it also means you can lose ₹1,000 if the price falls by ₹100.

This high leverage + volatility is what makes crude oil trading exciting but risky.

What Drives Crude Oil Prices?

Unlike stocks (which depend on company earnings), crude oil prices are shaped by global macro factors. A trader must think like an economist, keeping an eye on supply, demand, and geopolitics.

Here are the major drivers:

🔹 1. Global Supply–Demand Balance

• Oversupply → Prices Fall

• Shortage → Prices Rise

Example:

• In 2014, the U.S. shale oil boom created a supply glut → prices crashed from $100+ to below $40.

• In 2020, COVID-19 lockdowns caused demand to collapse → oil futures even went negative.

 

🔹 2. OPEC & OPEC+ Decisions

• OPEC (Organization of Petroleum Exporting Countries) controls ~40% of global oil production.

• When OPEC cuts production, prices usually rise.

• When OPEC increases production, prices may fall.

👉 Example: In 2022, OPEC+ (which includes Russia) cut output by 2 million barrels/day → Brent crude jumped above $95.

🔹 3. U.S. Inventory Data (EIA & API Reports)

• Every week, the U.S. publishes oil stockpile reports:

  • EIA (Energy Information Administration)

  • API (American Petroleum Institute)

Impact:

• Higher inventories = oversupply = bearish (prices down).

• Lower inventories = tighter supply = bullish (prices up).

📌 Many MCX intraday traders place bets on Wednesday night, when the EIA report is released.

🔹 4. Geopolitical Tensions

• Wars, sanctions, and conflicts can send prices soaring overnight.

Examples:

• Russia–Ukraine war (2022) → crude spiked above $120.

• Iran sanctions (2018) → restricted supply → prices surged.

• Middle East tensions (Gulf War, drone attacks on Saudi oil fields).

 

🔹 5. USD-INR Exchange Rate

• Oil is priced globally in U.S. dollars (USD).

• But on MCX, oil is quoted in Indian Rupees (INR).

• So, if the rupee weakens, MCX crude oil becomes costlier even if international prices stay flat.

👉 Example:

• Brent at $80, USD/INR = 80 → ₹6,400/barrel.

• If INR weakens to 85, Brent still at $80 → ₹6,800/barrel.

 

🔹 6. Correlation with Other Markets

• Natural Gas: Energy commodities often move together.

• Stock Indices: Rising oil sometimes pressures stock markets (inflation fears).

• Gold: During crises, investors shift between oil (risk) and gold (safe haven).

 

How to Trade Crude Oil in India (Step by Step)

Trading crude oil on MCX is similar to trading stocks, but with some unique aspects.

🔸 Step 1: Open a Commodity Trading Account

Open a Demat + Trading Account with a best commodity broker registered on MCX such as Dhan or Upstox

• You need:

  • PAN card

  • Aadhaar card

  • Bank account

  • Income proof (since commodities involve high risk)

Most brokers allow you to trade crude oil on their mobile apps/web platforms.

Pick a broker that offers:

• Fast execution

• Low brokerage

• Good charting tools (like TradingView)

• Margin calculator

• Education material or paper trading

Some beginner-friendly brokers in India:

• Dhan – Best Overall Broker for Commodity Trading in 2025

• Why it’s #1: Zero-cost tools, deeply integrated with TradingView, free APIs, and modern UI make Dhan the top choice.

• Strengths:

  • Dedicated commodity-focused trading tools

  • Fast order execution

  • Live market scanners and strategy builder

  • Free access to advanced charts

  • Also gives Margin Trading Facility (MTF)

 

• Ideal For: Both beginner and pro traders looking for low brokerage with high-end tools.

• Deep TradingView Integration: Unlike others who offer limited TradingView functionality, Dhan lets you trade directly from TradingView charts, a game-changer for active traders.

• Custom Strategy Builder: Dhan offers an in-built visual strategy builder that requires no coding—perfect for creating and testing commodity strategies on-the-go.

• Split-second Order Execution: With latency optimized infrastructure, Dhan offers faster order placement, crucial for volatile commodity markets like Crude Oil or Gold.

• Live Market Scanners for MCX: Filter top movers, unusual volume, or high volatility commodities in real-time.

• Pre-built Commodity Dashboards: See price trends, open interest, and volume in one glance.

• Have different types of orders available such as Gtt, Limit order, Market order, Stop-loss order, forever, after market, basket order, super order and lot more.

 

Did You Know?

If you place just 50 commodity trades a month, switching from a ₹20-per-order broker to Dhan (0.03%) could save you ₹500–₹800/month, especially if your trade sizes are small.

Feature for Commodity Traders

Dhan offers specific features that matter to commodity traders:

• Margin details shown upfront

• Real-time commodity news feed

• Custom alerts for commodity price levels

• Night mode optimized for after-market MCX traders

• Auto-Detection of Candlestick Patterns on Charts on their trading platform which means charts should automatically recognize & display the names of widely known Candlestick Patterns.
• Other features like 20 Depth Data, Price Alerts, Import Watchlists, etc. you have enough data to help you with your trades.

 

Dhan mobile App have been downloaded on playstore by more than 1.5 million people with a user rating of 4.5 which also shows the trust they have created among users within small time period.

If you’re serious about commodity trading in 2025, Dhan gives you the edge with powerful tools, zero hidden costs, and blazing-fast execution. Don’t just trade—trade smart with Dhan.

Open Your Free Dhan Account Now with no AMC charges

Steps top open an account:

1. Submit PAN, Aadhaar, Bank proof

2. Enable Commodity (Derivatives) in account settings

3. Add funds and get started

Click Here to Open Your Free Dhan Account
No paperwork. No account opening charges. Get started in 5 minutes! Dhan also offers advanced tools like TradingView & Options Trader built-in.

🔸 Step 2: Understand Margins

Unlike stocks (where you pay full value), in futures trading you only pay a margin.

Example:

• Crude = ₹6,500/barrel.

• Crude Mini contract = 10 barrels = ₹65,000.

• Margin (20%) = ₹13,000.

So with just ₹13,000, you control exposure of ₹65,000.

📌 This leverage is why crude is so exciting — and risky.

🔸 Step 3: Place Buy/Sell Orders

• If you expect crude prices to rise → Buy (Long).

• If you expect prices to fall → Sell (Short).

👉 Unlike stocks, you can profit both ways.

🔸 Step 4: Monitor & Exit

• You can square off anytime before expiry.

• If held till expiry, MCX settles contracts in cash (no physical delivery for retail traders).

 

3. Example Trade: Profit & Loss Calculation

Suppose crude oil price = ₹6,500.

• You Buy 1 lot Crude Mini (10 barrels) @ ₹6,500.

• Next day, price rises to ₹6,600.

Profit = (₹6,600 – ₹6,500) × 10 = ₹1,000.

If instead price falls to ₹6,400:
Loss = (₹6,400 – ₹6,500) × 10 = –₹1,000.

📌 A move of just ₹100 = ₹1,000 swing on a single mini lot.
On the big contract (100 barrels), the same move = ₹10,000 swing!

4. Instruments for Crude Oil Trading

Apart from standard futures, traders also use other instruments.

🔹 1. Futures Contracts (Most Common)

• Standardized contracts with expiry dates.

• High liquidity on MCX.

 

🔹 2. Options on Crude Oil Futures

• Introduced on MCX to give traders limited risk.

• Two types:

  • Call Option = bullish bet.

  • Put Option = bearish bet.

• Premium paid = maximum risk.

Example:

• Buy ₹6,500 Call @ premium ₹120.

• If crude rises to ₹6,700, option value increases → profit.

• If crude falls, max loss = ₹120 × lot size.

 

🔹 3. Calendar Spreads

• Buy near-month futures, sell far-month (or vice versa).

• Safer than outright bets.

• Example: If Nov contract is ₹6,500 and Dec is ₹6,550 → spread = ₹50.

Traders can profit if this difference narrows/widens.

🔹 4. International ETFs (Awareness Only)

• Outside India, traders use ETFs like USO (United States Oil Fund).

• Indian traders generally stick to MCX.

 

5. Case Study: When Oil Went Negative (April 2020)

One of the most shocking events in oil trading history happened during COVID-19.

• Demand collapsed as planes were grounded, factories shut, and cars stopped.

• Storage tanks in the U.S. filled up.

• On April 20, 2020, WTI crude futures crashed to –$37 per barrel.

  • Sellers were literally paying buyers to take oil off their hands!

• MCX crude oil also crashed — many traders were caught off guard.

📌 Lessons for beginners:

• Always use stop-loss.

• Global events can create unimaginable moves.

• Risk management is everything.

 

6. Why Beginners Should Start with Crude Mini

• Lower margin requirement.

• Smaller tick value (₹10 per move instead of ₹100).

• Easier to learn without blowing up capital.

Once confident, traders can scale up to the bigger contract.

Popular Strategies for Trading Crude Oil

Because crude oil is highly liquid and volatile, traders use a mix of short-term and long-term strategies. Let’s break them down with simple examples.

🔹 1. Intraday Trading (Same-Day Trades)

Intraday traders try to capture price movements within the day. Crude oil is perfect for this because:

• Prices can swing ₹200–₹400 in a single day.

• Global news (EIA report, OPEC meetings) often sparks intraday volatility.

Approaches for Intraday:

• Breakout Trading: Trade when crude breaks a key support/resistance.

• News-Based Trading: EIA inventory reports (Wednesdays 8 PM IST) often create sharp moves.

Example:

• Crude trading in range ₹6,450–₹6,500.

• Breaks above ₹6,500 with volume → Buy.

• Target: ₹6,600. Stop-loss: ₹6,470.

👉 Intraday requires discipline and quick decision-making.

🔹 2. Swing Trading (Few Days to Weeks)

Swing traders ride bigger moves by holding positions longer.

• They look for trend confirmation using technical indicators.

• Example tools: Moving Averages, RSI, MACD.

Example Swing Setup:

• Crude breaks above 50-day moving average at ₹6,400.

• You go long with target ₹6,800 over 1–2 weeks.

• Stop-loss at ₹6,200.

📌 Swing trading is less stressful than intraday and suits part-time traders.

 

🔹 3. Calendar Spread Trading

Instead of betting on direction, you trade the price difference between two contracts.

Example:

• Nov contract = ₹6,500.

• Dec contract = ₹6,550.

• Spread = ₹50.

If you expect the spread to widen → Buy Dec, Sell Nov.
If you expect it to narrow → Buy Nov, Sell Dec.

📌 Safer than outright futures because exposure is hedged.

🔹 4. Options Strategies

Options give traders limited risk but unlimited profit potential.

Common strategies:

• Buying Calls (bullish).

• Buying Puts (bearish).

• Straddles/Strangles (betting on volatility, e.g., before EIA report).

Example Straddle:

• Buy 1 Call ₹6,500 + Buy 1 Put ₹6,500.

• If crude makes a big move either way, you profit.

 

🔹 5. Hedging Strategies

Large businesses (like airlines, shipping companies) use crude oil futures to hedge.

Example:

• Airline expects crude to rise → buys futures to lock in fuel cost.

• Even if spot fuel prices rise, profits from futures offset extra expense.

Retail traders can also hedge — e.g., if long in crude futures, buying a put option as insurance.

2. Technical Analysis for Crude Oil

Many traders rely on charts and indicators to time entries/exits

🔸 1. Candlestick Patterns

• Doji → indecision.

• Bullish Engulfing → potential upward reversal.

• Hammer → bullish sign after a downtrend.

 

🔸 2. Support & Resistance Levels

• Example: Crude keeps bouncing from ₹6,300 (support).

• If it breaks below, next support may be ₹6,000.

 

🔸 3. Moving Averages

• 50-day MA = short-term trend.

• 200-day MA = long-term trend.

• Golden Cross (50 > 200) = bullish.

• Death Cross (50 < 200) = bearish.

 

🔸 4. Indicators

• RSI (Relative Strength Index):

  • Above 70 = overbought (possible fall).

  • Below 30 = oversold (possible rise).

• MACD (Moving Average Convergence Divergence):

  • Crossovers signal momentum changes.

 

To truly thrive in commodity trading, you don’t just need knowledge — you need discipline, habits, and smart tactics. Below are time-tested tips that can help beginners gradually become confident and profitable traders.

📘 1. Master One Commodity First

Don’t try to trade everything from gold to guarseed from day one.

Start with one — preferably Gold, Silver, or Crude Oil, since they:

• Have good liquidity

• Are easy to analyze due to ample global news

• Offer tight spreads (less cost per trade)

Once you master the movement, indicators, and fundamentals of one commodity, you’ll find it easier to expand.

🧠 2. Learn Price Behavior, Not Just Indicators

Indicators lag. Price action tells the truth.

Spend time reading candlestick charts, support/resistance zones, and volume spikes. Understand why a price moves — not just that it moved.

Example:
When crude oil hits ₹7,000 and volume rises, is it:

• A breakout?

• A bull trap?

• A news-based pump?

Don’t just react — interpret.

📉 3. Always Use a Stop-Loss (SL)

SL is your seatbelt in the trading highway.

Never enter a trade without knowing:

• Where you will exit if you’re wrong (SL)

• Where you will exit if you’re right (target)

Even professional traders have a 50–60% accuracy rate — risk management is how they stay profitable.

🔍 4. Follow Economic Calendar Weekly

Track major global events affecting commodities:

• Crude Oil: US inventory reports (EIA), OPEC meetings

• Gold: US Dollar index, interest rate changes

• Agri: Indian monsoon, crop reports, MSP changes

Use sites like:

• MCXIndia.com

 

📱 5. Use a Trusted Trading App or Platform

Pick a broker that offers:

• Fast execution

• Low brokerage

• Good charting tools (like TradingView)

• Margin calculator

• Education material or paper trading

Some beginner-friendly brokers in India:

• Dhan – Best Overall Broker for Commodity Trading in 2025

• Why it’s #1: Zero-cost tools, deeply integrated with TradingView, free APIs, and modern UI make Dhan the top choice.

• Strengths:

  • Dedicated commodity-focused trading tools

  • Fast order execution

  • Live market scanners and strategy builder

  • Free access to advanced charts

  • Also gives Margin Trading Facility (MTF)

 

• Ideal For: Both beginner and pro traders looking for low brokerage with high-end tools.

• Deep TradingView Integration: Unlike others who offer limited TradingView functionality, Dhan lets you trade directly from TradingView charts, a game-changer for active traders.

• Custom Strategy Builder: Dhan offers an in-built visual strategy builder that requires no coding—perfect for creating and testing commodity strategies on-the-go.

• Split-second Order Execution: With latency optimized infrastructure, Dhan offers faster order placement, crucial for volatile commodity markets like Crude Oil or Gold.

• Live Market Scanners for MCX: Filter top movers, unusual volume, or high volatility commodities in real-time.

• Pre-built Commodity Dashboards: See price trends, open interest, and volume in one glance.

• Have different types of orders available such as Gtt, Limit order, Market order, Stop-loss order, forever, after market, basket order, super order and lot more.

 

Did You Know?

If you place just 50 commodity trades a month, switching from a ₹20-per-order broker to Dhan (0.03%) could save you ₹500–₹800/month, especially if your trade sizes are small.

Feature for Commodity Traders

Dhan offers specific features that matter to commodity traders:

• Margin details shown upfront

• Real-time commodity news feed

• Custom alerts for commodity price levels

• Night mode optimized for after-market MCX traders

• Auto-Detection of Candlestick Patterns on Charts on their trading platform which means charts should automatically recognize & display the names of widely known Candlestick Patterns.
• Other features like 20 Depth Data, Price Alerts, Import Watchlists, etc. you have enough data to help you with your trades.

 

Dhan mobile App have been downloaded on playstore by more than 1.5 million people with a user rating of 4.5 which also shows the trust they have created among users within small time period.

If you’re serious about commodity trading in 2025, Dhan gives you the edge with powerful tools, zero hidden costs, and blazing-fast execution. Don’t just trade—trade smart with Dhan.

Open Your Free Dhan Account Now with no AMC charges

Steps top open an account:

1. Submit PAN, Aadhaar, Bank proof

2. Enable Commodity (Derivatives) in account settings

3. Add funds and get started

Click Here to Open Your Free Dhan Account
No paperwork. No account opening charges. Get started in 5 minutes! Dhan also offers advanced tools like TradingView & Options Trader built-in.

 

📝 6. Keep a Trading Journal

Track every trade with:

• Entry/Exit price

• Why you entered

• What worked/what didn’t

• Lessons learned

This is your personal trading autopsy report. Over months, it will reveal patterns in your success/failures.

📊 7. Build a Risk Plan

Don’t risk your entire capital on one trade.

Use the 1% Rule:
Risk only 1–2% of your capital per trade. If you have ₹50,000, your loss per trade should not exceed ₹500–₹1,000.

That way, you stay in the game even with multiple losses.

🧪 8. Paper Trade Before You Go Live

Don’t jump in with real money. Simulate.

Do mock trading. Use it to:

• Test strategies

• Understand contract behavior

• Build confidence

 

🧘 9. Control Emotions

The biggest enemy of a trader is:

• Fear of losing

• Greed to win more

• FOMO (Fear of Missing Out)

Follow a plan. Detach emotionally. Avoid trading when angry, tired, or bored.

Silver Trading in India (2025): Complete Beginner to Advanced Guide

 

3. Fundamental Analysis for Crude Oil

Unlike stocks, crude fundamentals are global. Traders watch:

• EIA weekly inventory report.

• OPEC meeting announcements.

• Geopolitical headlines (wars, sanctions, strikes).

• Economic data (China GDP growth = demand signal).

📌 Tip: Mark important event dates on your calendar before trading.

4. Risks in Crude Oil Trading

Trading crude can be highly rewarding — but it comes with real dangers.

🔹 1. High Volatility

• Crude can swing ₹300–₹500 in a single day.

• On a mini contract, that’s ₹3,000–₹5,000 per lot.

🔹 2. Overnight Risk

• Global news breaks after Indian markets close.

• Example: OPEC surprise cut → crude gaps up the next morning.

• Traders holding overnight may face big gap losses.

🔹 3. High Leverage

• Margin trading amplifies both profits and losses.

• A trader with ₹20,000 margin can lose it in hours if undisciplined.

🔹 4. Psychological Risks

• Greed (over-trading when in profit).

• Fear (exiting too early).

• Revenge trading after a loss.

📌 Controlling emotions is as important as chart reading.

5. Case Studies: Lessons from Traders

🔸 Case Study 1: The Disciplined Trader

• Starts with Crude Mini.

• Risks only 2% of capital per trade.

• Uses stop-loss every time.

• Grows account steadily over months.

🔸 Case Study 2: The Over-Leveraged Trader

• Starts with ₹50,000 capital.

• Buys 5 lots Crude Mini (~₹325,000 exposure).

• Price falls by ₹200 overnight → loss ₹10,000.

• Panics, adds more lots, blows account in weeks.

 

6. Common Beginner Mistakes

1. Trading without stop-loss.

2. Over-leveraging.

3. Ignoring global news.

4. Chasing quick profits.

5. Trading big contract before mastering mini.

 

7. Pro Tips for Beginners

• ✅ Start with 1 lot Crude Mini.

• ✅ Always use stop-loss (max 2–5% of capital).

• ✅ Follow EIA & OPEC reports.

• ✅ Journal every trade (what worked, what failed).

• ✅ Don’t trade when emotionally upset.

 

Glossary of Key Crude Oil Trading Terms

Here’s a beginner-friendly glossary. Each term is explained in simple words with examples.

FAQs on Crude Oil Trading

Q1. Can beginners trade crude oil in India?

Yes. But start with Crude Mini, trade small, and focus on learning.

Q2. What is the minimum margin required?

Around ₹13,000–₹15,000 for 1 Crude Mini contract (varies with price and volatility).

Q3. Which is better – Futures or Options?

• Futures = higher risk/reward, unlimited profit/loss.

• Options = limited risk (loss capped to premium). Better for beginners.

Q4. Is crude oil trading profitable?

Yes, but only with discipline and risk management. Many beginners lose money by over-leveraging.

Q5. What is the trading time for MCX crude oil?

Monday–Friday, 9:00 AM – 11:30 PM (till 11:55 PM during U.S. daylight savings).

Q6. What happens if I hold crude oil contracts till expiry?

Retail traders get cash settlement (no physical oil delivery).

Q7. Why is crude oil so volatile?

Because it reacts instantly to global news — OPEC decisions, wars, currency moves, and U.S. inventory reports.

Q8. How is crude oil different from trading stocks?

• Stocks depend on company performance.

• Crude oil depends on global supply-demand and geopolitics.

Q9. Can I short-sell crude oil?

Yes. Futures allow you to profit from falling prices.

Q10. Do I need a Demat account to trade crude?

You need a commodity trading account with an MCX broker. Demat is optional (depends on broker setup).

Q11. How much capital is recommended to start?

• Minimum: ₹20,000–₹30,000 for 1 Crude Mini.

• Better: ₹50,000–₹1,00,000 for safe money management.

Q12. How are profits taxed?

Crude oil trading profits are treated as business income and taxed as per income slab. Audit may be required for large volumes.

Q13. Can NRIs trade crude oil in India?

Currently, NRIs cannot trade on MCX. They can trade crude ETFs abroad.

Q14. What reports should traders follow?

• EIA Weekly Report (U.S.).

• OPEC Monthly Oil Market Report (MOMR).

• API Stock Report.

• India’s import/export data.

Q15. What is a barrel of crude oil worth in rupees?

If Brent = $80 and USD/INR = 83 → ₹6,640 per barrel.

Q16. Why did crude oil prices go negative in 2020?

Storage tanks filled up during COVID lockdowns → sellers paid buyers to take oil away.

Q17. Which is safer: Crude Mini or Big Contract?

Crude Mini. It has smaller lot size and lower margin, perfect for learning.

Q18. What is MCX crude oil options expiry cycle?

Crude options expire 2 business days before the underlying futures contract expiry.

Q19. Is crude oil correlated with the stock market?

Yes, partly.

• Rising crude → bad for Indian economy → may hurt stocks.

• Falling crude → reduces inflation → positive for stock market.

Q20. Can I hedge crude oil exposure with gold?

Not directly. But traders sometimes use gold as a safe haven during oil market volatility.

Q21. Do airlines really hedge crude oil?

Yes. For example, IndiGo and other airlines use futures contracts to stabilize jet fuel costs.

Q22. Is crude oil trading legal in India?

Yes. Trading on MCX through registered brokers is fully regulated by SEBI.

Q23. What are the biggest risks?

• Sudden geopolitical news.

• Overnight gap moves.

• Over-leverage without stop-loss.

 

Summary Tables

📊 Table 1: MCX Crude Oil Contracts

 

📊 Table 2: Major Oil Producers & Consumers

 

📊 Table 3: Breakdown of 1 Barrel of Oil

 

Conclusion: The Future of Crude Oil Trading in India

Crude oil trading is one of the most exciting opportunities in India’s commodity markets. It combines:

• High liquidity.

• Global influence.

• Significant price swings.

But with opportunity comes risk. Beginners should:

• ✅ Start with Crude Mini.

• ✅ Always follow global news (EIA, OPEC, geopolitics).

• ✅ Use strict risk management (never risk more than 2–5% of capital per trade).

• ✅ Focus on learning before chasing profits.

Looking ahead, India’s dependence on oil will remain high for at least another decade, even as renewable energy grows. That means crude oil will continue to be a key trading instrument for years to come.

For disciplined traders, crude oil can be not just black gold, but also a golden opportunity.

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Here is the list of things as a beginner you should know, if you are thinking for doing intraday trading.

A brief understanding of

How share market works?

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Learn about the basics of candlestick chart patterns and how to use them for intraday trading and investing. You should also learn about the best moving averages to use for better trading result.

Checkout Mastering Intraday Trading: A Beginner’s Guide to Profitable Strategies in the Indian Stock Market

Note: Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only and intended to give information. All investments are subject to risks, which should be considered prior to making any investments.

Disclaimer

This article is for educational purposes only. Commodity trading involves significant risk of loss. Please consult your financial advisor before investing or trading.