FXCM Group LLC has seen a new opportunity as oil trading started to surge in activity in recent months after the oil crash some time ago. As a result, the firm has launched two new Contracts for Difference (CFD) products on Wednesday: USOilSpot and UKOilSpot.
Developing New Offerings
FXCM stands as an online trade provider, allowing for CFD, forex, as well as crypto trading. These two new forms of spot oil products will stand to represent the current spot price of West Texas Intermediate and Brent Crude.
As per the statement that the international trading provider had made, customers will be capable of leaving their positions indefinitely open, should they decide to trade in these new products. This was done in order to avoid the potentially thin levels of liquidity that could occur within the days that lead up to a contract’s expiration.
With these new contracts included, FXCM clients will be capable of trading the existing contract, UKOil, and USOil, respectively, or they can opt for the two new products they announced today. The critical difference between the two, is the old contracts hold monthly expirations, and are past on the front-month futures contracts, while the new contracts don’t expire at all.
A Year To Remember
The year of 2020 has been one of chaotic upheavals and incredible volatility. As a testament to this, April of 2020 saw the first-ever event of oil prices going negative with the price of WTI futures contracts for May plummeting down. This massive price drop was due to the COVID-19 pandemic wreaking havoc across the world and forcing a lockdown in most of it. This, as a result, caused the demand for oil to be reduced dramatically, causing a very large supply and far less demand.
Adapting To The Crises
Ever since, a large array of liquidity and trading providers have started to launch new oil products to try and compensate. EToro had launched an oil portfolio going by the name of OIlWorldWide. This portfolio gave retail investors exposure to 20 global companies across the world’s oil sector. IS Prime, in turn, had developed two proprietary products fo the US Oil Index as well as the UK Oil Index
Now that the world is starting to adapt in these trying times, part out of innovation and part out of necessity, things are beginning to change, with the oil price stabilizing once more. With any luck, things can return back to normal, and the whole pandemic will slowly start to de-escalate.