The Five Light Sweet Crude Oil Trading Methods WTI and Brent: Global Crude Oil Investment Guide 2025

Global Crude Oil Market Outlook in 2025

Crude oil has always been one of the most closely watched assets by investors. Will 2025 bring new opportunities or not? This article will analyze in detail what is light sweet crude oil, the main crude oil standards, and 5 effective investment methods for this year’s market.

What You Need to Know About WTI, Brent, and Light Sweet Crude Oil

Global Variety of Crude Oil Types

When reading financial news, people often hear about today’s oil prices rising or falling and assume only one type of oil is traded. In reality, there are over 160 different types of crude oil bought and sold worldwide. Each type has different economic value depending on its chemical properties, sulfur content, and density.

The two most widely used crude oil standards are West Texas Intermediate (WTI) and Brent Crude Oil. On trading platforms, they are denoted as:

• USOil = WTI futures contract
• UKOil = Brent futures contract
• USOilSpot = WTI spot contract
• UKOilSpot = Brent spot contract

What Is Light Sweet Crude Oil? Understanding Brent Crude Oil

Brent Crude Oil (Brent Crude Oil, UKOIL) is the standard for oil extracted from the North Sea region. This type of oil belongs to the light sweet crude group — low sulfur content and small specific gravity, making it an ideal raw material for refining gasoline, diesel, and other high-demand oil products.

Because it is transported via sea, Brent oil can be easily shipped to distant markets. About two-thirds of global crude oil contracts today reference Brent prices, making it the most widely used standard.

WTI Oil: Characteristics and Pros & Cons

WTI Oil (WTI Crude Oil, USOIL) is extracted from the US mainland and transported via pipelines. Its transportation costs are higher than Brent. In terms of quality, WTI is light sweet crude with higher density, easier to refine into gasoline, and of higher quality.

Although WTI has better quality and higher transportation costs, its trading price is usually lower than Brent because Brent is easier to transport, leading to higher trading demand.

History of Global Crude Oil Price Fluctuations

Stable Periods and Turning Points

Since the 20th century, crude oil has always been a strategic resource for nations. When the gold standard system was in effect, oil prices remained stable at around 2-3 USD per barrel for decades.

The Fourth Middle East War in 1973 marked a turning point. As nationalist sentiments rose in Middle Eastern countries and OPEC was formed to counter Western oil giants, oil prices skyrocketed. By 1985, oil reached $30 per barrel.

Supply Control from the Source

From this period onward, oil prices were no longer solely driven by market demand but mainly influenced by production decisions. In 1986, when Arab countries lifted production limits, oil prices plummeted from $30 to $10 per barrel.

For most of the subsequent period, oil prices fluctuated between $10 and $30. The September 11, 2001 attacks heightened global security concerns, leading countries to stockpile strategic oil reserves, while Middle Eastern conflicts reduced output. The peak was in 2008 when oil hit a record $147 per barrel.

Shale Oil Technology and Structural Changes

Sky-high oil prices spurred the development of shale oil extraction technology. Oil production surged, causing prices to decline. In 2015, the government adjusted policies to allow crude oil exports to manage excess supply.

The COVID-19 pandemic in 2020 reduced transportation demand, causing oil prices to collapse. Later, environmental regulations and the Ukraine-Russia conflict in 2022 pushed prices back up. In 2024, oil prices faced pressure from supply-demand balance, decreasing about 3% for the year, closing at $74.6 per barrel.

Factors Affecting Long-term and Short-term Oil Prices

( Long-term Influencing Factors

Key long-term factors include:

• Spot market supply-demand: The balance between global production and actual consumption
• Oil inventory levels: Reserves held by major countries influence price expectations
• Geopolitical situation: Regional conflicts can disrupt supply
• Market sentiment: Investment decisions by organizations and individual investors

) Short-term Events to Watch

In the short term, oil prices are often influenced by OPEC+ policy decisions and geopolitical events. Investors should pay attention to:

• OPEC+ meetings in June
• Oil inventory data and US production changes
• China’s economic recovery progress
• Developments in Middle Eastern conflicts, especially Iran and the Red Sea region

Oil Price Forecast for 2025

Expected Fluctuation Pattern: “Down - Up - Down”

Brent oil prices are forecasted to fluctuate following a “decrease first, then rise, then decrease again” pattern. Early in the year, affected by weak economic conditions and low demand, oil prices steadily declined, dropping below $63 per barrel in April — the lowest in 2 years.

In May, oil traded in the $64-66 range. In mid-June, tensions escalated as Israel launched airstrikes on Iran, pushing prices up over 10%, surpassing $73 per barrel. However, as concerns eased, prices quickly fell back to $67-69.

Outlook for the Second Half of the Year

If geopolitical tensions ease and OPEC+ signals increased production, the International Energy Agency ###IEA### forecasts Brent prices may weaken further, with an average year-end price around $61 per barrel.

Overall, the oil market in the first half of 2025 will mainly be affected by geopolitical risks, while supply-demand pressures remain, causing price fluctuations with a downward bias.

5 Main Investment Methods for Crude Oil in 2025

( Method 1: Trading Crude Oil via CFDs

CFD )Contract for Difference### is the simplest way to participate in the crude oil market. This instrument is similar to a stock code for oil, with CFD prices directly reflecting the price of the standard oil (WTI or Brent).

Example: If WTI is trading at $23.22 per barrel and an investor believes the price will rise, they can buy a WTI CFD. When the price increases, they sell the CFD and profit from the difference.

Advantages of CFDs:

• Use of leverage: Only need a 1% margin to control the full position
• More flexible than stocks: Allows short selling if expecting a price decline
• Profit in both directions: Whether prices go up or down, investors can profit

Investors can start with small capital and practice on free demo accounts before trading live.

( Method 2: Trading Futures )Futures###

For more professional investors with larger capital, crude oil futures contracts are traded on listed exchanges. This tool allows buying/selling oil at a predetermined future date at an agreed price.

Futures are often used for hedging against price volatility by professional traders. However, the minimum transaction size (is 10,000 barrels per contract), making it suitable mainly for institutional investors.

( Method 3: Investing via Oil ETFs

ETF )Exchange-Traded Fund### is a diversified investment basket including various oil assets. Main advantages:

• Low volatility: Risks are mitigated through diversification
• Low capital requirement: Lower than buying futures contracts
• Avoids single stock risk: Reduces impact from highly volatile stocks

Top-rated oil ETFs include: Vanguard Energy ETF (VDE), VanEck Vectors Oil Services ETF (OIH), and United States Oil Fund (USO).

( Method 4: Investing via MLP )Master Limited Partnership###

MLP is a direct investment in oil companies in the form of limited partnerships. Investors become limited partners, sharing profits while bearing business risks.

MLP companies typically focus on pipelines and transportation, with different performance metrics compared to traditional exploration companies. Popular MLPs include: Enterprise Products Partners (EPD), Western Gas Partners (WES), MPLX LP.

( Method 5: Buying Oil Company Stocks

This is an indirect investment in crude oil through oil exploration and production companies. Stock prices of these companies are highly correlated with crude oil price movements.

To select good stocks, analyze business performance, revenue growth, and profit margins. Some favored energy stocks are: Sinopec, ExxonMobil, Royal Dutch Shell, BP, Total SA.

) Comparison Table of 5 Crude Oil Investment Methods

Conclusion: With small capital, CFD is the simplest and most accessible option. These investors can leverage, trade both directions ###buy or sell short###, and explore all opportunities from market volatility.

5 Principles to Remember for Success with Crude Oil

( 1. Understand the 4 Main Drivers Affecting Oil Prices

Production levels and shale reserves in the US, OPEC, USD exchange rate, and global demand. Strong convergence of news related to these four factors will push oil prices sharply higher; negative news will cause declines.

) 2. Follow Daily News and Analyze Information

The oil market is characterized by news-driven volatility rather than actual conditions. Countries producing oil may use news to profit. To avoid herd mentality, regularly follow reliable sources like the US Energy Information Administration.

3. Choose the Right Benchmark Between Brent and WTI

Each type of oil is extracted from different regions with different influencing factors. Understanding the basic differences and influencing elements will help forecast prices more accurately.

4. Analyze Historical Price Fluctuations

History often repeats itself. Comparing current fluctuations with past patterns helps make the most accurate trading decisions.

5. Select Tools Suitable for Your Financial Capacity

Choose trading instruments and reputable brokers that match your financial ability and risk tolerance to avoid heavy losses.

Conclusion

Crude oil remains a popular financial instrument in 2025. Currently, there are 5 main investment methods: CFDs, futures contracts, ETFs, MLPs, and oil company stocks. Each suits different capital levels and risk appetites.

If you have small capital and are willing to accept high risks for high profits, light sweet crude oil CFDs will be the most suitable product in 2025. The key is to understand the influencing factors, monitor news closely, and manage risks carefully.