Among commodities, crude oil is the undisputed heavyweight champ. The world's most actively traded commodity is in the news every day and affects everyone in one way or another. Does that mean trading crude oil futures contracts is only for the biggest and most experienced?
Not at all. Qualified retail futures traders can gain exposure to crude without having to pony up big bucks for ringside seats.
The CME Group launched Micro WTI Crude Oil (/MCL) futures contracts in 2021 (WTI stands for West Texas Intermediate grade crude oil, the U.S. benchmark). These Micro WTI Crude Oil futures contracts are linked to the exchange's benchmark WTI Crude Oil (/CL) futures contract but require less money up front. Like CME Group's micro contracts based on bitcoin (/MBT) and the S&P 500® index (/MES), Micro WTI Crude Oil futures pose smaller and potentially more cost-effective opportunities for futures trading newcomers to gain exposure to crude oil. Of course, micro futures aren't suitable for everyone, and they still carry the same substantial risk of loss as full-size contracts, and you can lose more than your initial investment.
Crude oil is at the epicenter of the global energy marketplace because most energy companies are highly correlated to oil prices, which can be volatile. For qualified retail investors, /MCL contracts offer additional flexibility to gain exposure in the crude oil market, for hedging or for speculation, at a fraction of the cost of traditional futures contracts.
Here are a few basics on the CME Group's Micro WTI Crude Oil futures and how they might be applied to an investing or trading strategy.
Micro crude futures require lower margin than full-size oil futures contracts
Futures contracts, which are agreements to buy or sell a predetermined amount of a commodity or financial product on a specified date, are typically highly leveraged—meaning a relatively small amount of money can get you exposure to a relatively large amount of underlying value (often referred to as "notional" value). Oil futures, like other commodity futures contracts, are traded by using a margin requirement, which is cash set aside as a good faith deposit.
One CME standard WTI Crude Oil (/CL) futures contract represents 1,000 barrels of oil (WTI stands for West Texas Intermediate grade crude, the U.S. benchmark). Micro WTI Crude Oil (/MCL) futures are one-tenth the contract size of the standard futures contract and represent 100 barrels of oil. This means the /MCL contract's margin requirement is also one-tenth that of its larger counterpart. For example, during March 2025, the initial margin requirement for one standard /CL futures contract was $11,664, the margin requirement for a /MCL contract was $13,720, and the margin requirement for a /MCL contract was $1,372.
Remember, if you're considering futures trading, make sure you understand the basics of futures margin. Regardless of how large a position is, more leverage comes with more risk. Leverage can magnify profits and losses quickly and with smaller market movements, which means an investor or trader could lose much more than the initial amount deposited.
Trading oil futures
Crude oil prices can be volatile because of global conflicts, economic conditions, issues in drilling and transportation, and other factors, which is why oil is often in the news and why the oil market generates among the highest, if not the highest, trading volume of any commodity.
Trading volume is an important indicator of liquidity, reflecting whether a market has ample buyers and sellers and that orders are executed quickly and efficiently. In CME's standard WTI Crude Oil futures contract, for example, slightly more than 983,000 contracts changed hands each day in 2024.
The CME Group's micro futures based on the S&P 500 index and other equity benchmarks have grown rapidly in recent years, reflecting the growing acceptance of futures and expanding demand from retail traders and others for smaller contract sizes and more choices.
Because futures are leveraged, traders can open positions that don't tie up a lot of capital for long periods of time. Smaller products like /MCL can make it less expensive for retail traders and investors to take positions in the crude oil market, and they can gain futures exposure while avoiding pricier contracts.
Similar capital efficiency plays can be applied to /MCL futures. For example, suppose a futures trader holds shares of a major oil and gas exploration company or oil field services provider they want to keep for the long haul, but they're concerned that a drop in oil prices or other short-term events might hurt the value of their holdings. A hedging trading strategy based on micro crude oil futures may offer the potential to ride out such events without having to part with the underlying assets. However, it's important to remember that any trading strategy comes with risk; taking the opposite hedge position in this scenario can limit the potential portfolio gains a futures trader would have realized, should market conditions go against the hedge. Additionally, a short hedging position can present unlimited risk, so approach cautiously, as with any trade.
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Futures margin, also known as a "performance bond," is the amount of money you are required to deposit in your futures account to establish and maintain a futures position. Futures margin is not a loan. If at any given time the funds in your account drop below the minimum regulatory requirement, or "house" margin requirements, you may be required to immediately deposit additional funds to maintain your position, or your position may be liquidated at a loss. You will be liable for any resulting debits. Charles Schwab Futures and Forex LLC may increase its "house" margin requirements at any time and is not required to provide you with advance notice of such requirement changes or liquidations initiated by Schwab. You are not entitled to an extension of time on any type of margin call.
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