What is the difference between spot crude oil and Futures Crude Oil?

Crude oil investment is a hot investment project in the current market. Some people asked, what is the difference between spot crude oil and Futures Crude Oil? I'd like to introduce it to you. I hope it can help you.

Spot crude oil investment

First of all, it implements the T + 0 trading system, which can be repeated every day. It has leverage to improve the utilization rate of investors' funds, and has a two-way trading mechanism of "buy up and buy down". No matter the price rises or falls, there are investment opportunities. The biggest advantage is that the risk is smaller, the market is easy to grasp, more profit opportunities, the most suitable for the pursuit of a stable style of investors.

This investment method was mainly used among large institutions earlier. Since February 14, 2014, Beijing Petroleum Exchange opened a channel for individual spot investment, individuals can invest through cooperation with institutional members within the Beijing Petroleum Exchange.

Oil spot transaction refers to a kind of transaction in which the buyer and the seller, based on the agreed payment method and delivery method, carry out the physical oil delivery immediately or in a short period of time based on the demand for physical oil and the purpose of selling physical oil. In the spot transaction, with the transfer of commodity ownership, the exchange and circulation of oil entities are completed at the same time. Therefore, oil spot trading is the direct manifestation of oil commodity operation. Oil spot trading is a widely used and concerned trading method in the world, especially in developed countries.

Spot transaction refers to the transaction between big banks, as well as large banks acting for large customers. After the transaction is concluded, the cash receipt and payment delivery shall be completed within two business days at the latest. But the delivery time can be extended continuously.

Futures Crude Oil Investment

Futures Crude oil investment is a kind of trading mode relative to spot trading, which is developed on the basis of spot trading. An organized way of trading by trading standardized futures contracts on a futures exchange. The object of futures trading is not commodity (subject matter) itself, but the standardized contract of commodity (subject matter), that is, standardized forward contract.

This way of investment can also be used by ordinary investors, mainly to do direct futures trading. The advantage is that it can be operated by leverage, can be long or short, flexible operation and good liquidity. The disadvantage is that the risk is huge and the amount of capital is used more, which requires investors to have enough experience. Therefore, the way of futures investment in China has gradually declined.


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