From an investment perspective, Brent crude oil futures: trading characteristics, trend analysis, and risk management

Current Status of the Brent Crude Oil Market

As one of the world’s most important benchmark prices, Brent crude oil shares the international pricing system’s dual core with U.S. Light Sweet Crude Oil (WTI). In 2024, its performance was relatively weak, closing at $74.6 per barrel, down about 3% from the previous year. Entering 2025, market volatility intensified, with prices sliding to the critical support level of $63 at the start of the year due to global economic slowdown, then fluctuating sharply between $61 and $73 amid geopolitical risks and OPEC+ policy expectations.

Overall, the Brent oil market currently faces a “weak fundamentals, risk event-driven” situation, with supply pressures and demand softness forming the key background for a long-term downtrend.

Market Positioning and Characteristics of Brent Crude Oil Futures

Brent crude oil (Brent Crude Oil) is produced from North Sea oil fields, classified as light, low-sulfur crude oil, with the following features:

• API Gravity: around 38°, classified as light crude
• Sulfur Content: 0.37%, low cost
• Main Uses: Price benchmark for Europe, Africa, and the Middle East

The origin of Brent crude oil futures lies in—since crude oil is a vital industrial power source and an upstream raw material for many products (such as plastics, adhesives, etc.), its price fluctuations have a profound impact on the economy of daily life. The emergence of futures contracts allows market participants to anticipate price trends, hedge risks, and also enables investors to realize gains through price judgments. By financializing crude oil, all market participants can join the buying and selling process, ultimately leading oil prices toward fair market value rather than being controlled by a few oligarchs.

Trading Channels and Contract Specifications for Brent Crude Oil Futures

Taiwan investors can trade Brent crude oil futures through multiple platforms:

1. Taiwan Futures Exchange Version

• Code: BRF
• Contract Size: 200 barrels
• Trading Hours: Monday to Friday, Day session 08:45-13:45, Night session 15:00-05:00 next day
• Margin: Minimum NT$60,000, Maintenance margin NT$46,000 (adjustable)
• Minimum Tick: NT$0.5 per barrel

2. Intercontinental Exchange (ICE) International Version

• Code: BZ
• Contract Size: 1,000 barrels
• Trading Hours: Monday to Friday, 06:00-05:00 next day
• Margin: $6,765 / Maintenance margin $6,150
• Minimum Tick: $0.01 per barrel

3. Mini Contract Version (Singapore Exchange)

• Code: BM
• Contract Size: 100 barrels
• Margin: $620
• Minimum Tick: $0.01 per barrel

It is particularly important to note that since crude oil is priced in USD, trading Taiwan futures contracts involves monitoring exchange rate risk.

Historical Trajectory: From Gold Standard to Supply-Side Reforms

Reviewing the history of Brent crude oil futures helps better understand current market dynamics:

Before the 1970s: Under the gold standard, crude oil prices remained stable at $2-3 per barrel for a long period.

1973-1985: After OPEC’s formation, rising national consciousness challenged the monopoly of the seven major oil companies, causing oil prices to surge to $30 per barrel. Supply-side began to gain pricing power.

1986 Major Shift: Arab countries lifted production limits, leading to unlimited extraction, causing prices to plummet to $10, then fluctuating mostly between $10-30.

2000-2008 Bull Market: The 9/11 attacks triggered geopolitical tensions, with many countries increasing strategic reserves, and Middle Eastern production constrained, pushing prices to a historic high of $147 per barrel in 2008. High profits encouraged companies to develop shale oil technology.

2015 Turning Point: The US lifted crude oil export bans, releasing shale oil capacity significantly, leading to oversupply and lower prices.

2020 Pandemic Shock: Global travel and transportation demand plummeted, causing oil prices to crash.

2021-2024 Volatility: Biden administration’s environmental policies restricting shale oil, Russia-Ukraine war disruptions, and OPEC+ production cuts have alternated to drive oil price fluctuations.

Outlook for 2025

Based on current market dynamics, Brent crude oil futures face three key factors:

Short-term Drivers:

• Rapid price increases during heightened geopolitical risks (e.g., Iran airstrikes causing prices to break through $73)
• Quick declines when Middle East tensions ease (e.g., market concerns easing, returning to $67-69)

Medium-term Constraints:

• Persistent signals of OPEC+ increasing production
• Slow recovery of global demand
• Long-term ceiling from shale oil expansion and renewable energy development

International Energy Agency Forecast: Oil prices may further weaken in the second half, with year-end average around $61. Overall, the 2025 Brent oil market is expected to be “geo-risk driven, with weak fundamentals,” exhibiting a volatile and bearish pattern.

Risk Management Points in Trading

Brent crude oil futures have significant leverage, and risks should not be underestimated:

Risk Example: For a 1,000-barrel contract, a $0.01 price movement yields a profit/loss of $10; a $1 movement results in $1,000. With an initial margin of about $6,765 (10%), a 1% price change can lead to an $850 profit/loss, exceeding 12% of the initial margin. If account funds fall below the maintenance margin (usually 75-80% of the current margin), there is a risk of margin call or forced liquidation.

Practical Recommendations:

1. Deposit margin above the minimum requirement (suggest 1.5-2 times) to leave buffer space
2. Strictly set stop-loss orders to prevent excessive losses during extreme market moves
3. Confirm fee structures beforehand (typically $1-5 per lot), include costs in planning
4. Combine fundamental analysis (OPEC policies, inventory data, Chinese demand) with technical signals to develop trading strategies

Comparison of Crude Oil Futures Instruments

Different types of crude oil futures are suitable for investors with varying capital sizes:

For investors with limited capital, mini contracts or CFDs offer more flexible alternatives. CFDs allow higher leverage, lower initial investment, long and short positions, and no expiry, making them suitable for small investors to diversify assets.

Summary

Brent crude oil futures are among the core tools of modern energy finance, characterized by high liquidity and global pricing functions. Investing in these products requires a deep understanding of supply-demand fundamentals, geopolitical risks, OPEC policies, and technical signals, along with a strict risk management framework. Whether choosing standard futures or mini contracts, investors should tailor their allocations based on capital, risk tolerance, and experience, avoiding chasing highs blindly or over-leveraging.