LemonTrades
TL;DR
- A WTI contract (CL) is 1,000 barrels, so a $1 move is $1,000; micro WTI (MCL) is 100 barrels, a tenth of that.
- Start with the micro, always trade with a stop, and roll or close before expiry.
- Oil moves on Wednesday’s EIA report, OPEC+ and supply shocks.
- Follow Brent and WTI on LemonTrades for OPEC+, inventory and supply headlines the moment they break, with alerts on sharp moves and the likely cause.
An oil futures contract is an agreement to buy or sell a set amount of crude oil at a fixed price on a future date. Almost nobody who trades them wants the oil; they want the price moves. Here’s how they work, and how to trade them.
How oil futures contracts work
- Size: a standard WTI contract (CL) is 1,000 barrels. Micro WTI (MCL) is 100 barrels.
- Price and ticks: quoted in dollars and cents per barrel. One cent is $10 on CL and $1 on MCL, so a $1 move in oil is $1,000 or $100 per contract.
- Months: there’s a contract for every month, years ahead. Most trading is in the nearest one, the front month.
- Expiry: each CL contract stops trading around the 20th of the month before delivery. Traders close or roll their position to the next month before then.
- Settlement: CL is physically delivered in Cushing, Oklahoma, if you hold it to the end; micro WTI is settled in cash. Brent on ICE is cash-settled too.
- Margin: you put down a deposit, set by the exchange and your broker, not the full value. Exchanges raise it when oil gets volatile.
- Hours: Sunday 6:00 PM to Friday 5:00 PM ET, with a daily break from 5:00 to 6:00 PM. See CME trading hours.
How to trade them, step by step
- Open a futures account with a registered futures broker (in the US, check it in the NFA’s BASIC database).
- Choose the contract. Start with micro WTI (MCL): a tenth of the risk of CL.
- Pick the month. Trade the front month, and note when it expires.
- Plan the trade: entry, stop and target. Size it so the stop risks a small share of your account; with MCL, a 50-cent stop is $50 per contract.
- Place the order with a bracket (stop and target attached), so your exit is set before the market moves.
- Mind the calendar: the EIA inventory report on Wednesdays at 10:30 AM ET and OPEC+ meetings move oil sharply.
- Close or roll before expiry. Don’t hold a physically delivered contract into its last days.
An example
Say you buy one micro WTI contract at $80.00 with a stop at $79.40 and a target at $81.20. If oil hits your target, you make $1.20 × 100 barrels = $120. If it hits your stop, you lose $0.60 × 100 = $60, plus commissions. Same trade on a full CL contract: $1,200 or $600.
Mistakes to avoid
- Starting with the full contract instead of the micro.
- Forgetting expiry. In April 2020, the expiring WTI contract settled at −$37.63 because there was nowhere left to store oil.
- Holding through the EIA report or an OPEC+ meeting by accident.
- Using the full margin your broker allows.
New to oil? Start with how to trade oil. Brent specifics are in Brent futures explained, and practice is free in our trade simulator.
Education, not financial advice. Contract details are set by the exchanges and can change; check CME’s and ICE’s specifications. Futures are leveraged and you can lose more than you deposit. See our disclaimer.
