# How to Hedge Oil 24/7 > Hedge existing oil exposure or future fuel costs with the right trade direction. Understand WTI basis, contract references, sizing, and the limits of weekend perps. - Canonical: https://www.liquid.trade/learn/how-to-hedge-oil-24-7 - Published: 2026-09-18 - Category: Strategy - Tags: Oil, WTI, CL, Hedging, Perpetuals, 24/7 Trading --- **To hedge oil 24/7, short an oil perpetual against an existing holding, or go long to hedge a future purchase against rising costs.** Liquid's [WTI crude oil market](https://app.liquid.trade/trade/xyz:CL) lets you open and adjust those positions at night and over the weekend. Start with the oil price that affects you. WTI is a direct match for WTI-linked exposure; Brent, fuel costs, oil funds, and energy stocks can move differently. ## Should an oil hedge be long or short? A hedge should gain in the scenario that hurts the position or business you already have. | Existing exposure | Adverse move | Potential hedge direction | | --- | --- | --- | | WTI-linked holding or unsold production | Oil falls | Short WTI | | Future purchase priced from WTI | Oil rises | Long WTI | | Airline jet-fuel bill | Jet fuel rises | A long crude proxy may offset part, with fuel basis risk | | Energy-company shares | Share price falls | WTI alone may be an unreliable proxy | For example, a producer planning to sell oil uses a short to offset falling revenue. A buyer uses a long to offset a rising purchase bill. ## Why does the oil benchmark matter? WTI and Brent can move differently. So can crude and refined products such as gasoline, diesel, or jet fuel. Delivery location, grade, transport costs, refining margins, and contract dates all affect the relationship. This difference between your exposure and the derivative is **basis risk**. An oil ETF may hold and roll dated futures. A producer may sell a local grade at a discount to a benchmark. An energy company also has labor costs, debt, production decisions, and broader equity exposure. Matching the dollar value alone does not match those risks. For Liquid's [CL market](/markets/oil), check the price reference and how it rolls between futures contracts. That can affect how closely it tracks a particular oil fund or delivery month. ## How do you size an oil hedge? For closely matching price exposure, **target hedge notional = exposed value × hedge fraction**. For physical exposure, first translate the quantity into the correct benchmark units and price sensitivity. Do not assume a Liquid order quantity is the same as a standardized exchange futures lot. Suppose you have $30,000 of exposure that moves one-for-one with the WTI reference. You choose to hedge half with a $15,000 short. In this hypothetical example: | WTI move | Existing exposure change | Short PnL | Combined change | | --- | --- | --- | --- | | Falls 10% | −$3,000 | +$1,500 | −$1,500 | | Rises 10% | +$3,000 | −$1,500 | +$1,500 | The math assumes matching percentage moves and no fees, funding, slippage, or liquidation. It illustrates a 50% hedge, not a recommended trade size. Now consider a future purchase: 200 barrels at an illustrative $75 benchmark would cost $15,000. A matching $15,000 long gains about $1,500 if the reference rises 10%, offsetting the $1,500 increase in the purchase cost. If the reference falls 10%, the long loses $1,500 while the purchase becomes cheaper. Quantity, timing, and basis must match for that simplified result to hold. ## Can you hedge oil over a weekend? Yes. The [trade[XYZ] commodity perps](https://docs.trade.xyz/) trade around the clock, allowing a hedge to respond to news while traditional oil markets are closed. Weekend liquidity can be thin, and the perp can trade away from the last external price. Check the spread and order-book depth before entering. Prices may adjust again when traditional markets reopen. ## What can break an oil hedge? An oil producer can gain from higher future sale prices while a short perp loses margin today. A fuel buyer can benefit from cheaper future deliveries while a long perp loses margin today. Those business benefits are not automatically cash available to support the derivative. That timing gap makes [liquidation risk](/learn/what-is-liquidation) central. A forced exit can remove the hedge before the physical purchase or sale occurs. Other risks include changing basis, shifts in the futures curve, funding costs, trading fees, collateral risk, and interruptions. Under [Liquid's funding convention](https://docs.liquid.trade/trading/funding-rates), positive funding charges longs and pays shorts; negative funding reverses the direction. Neither a short nor a long has a fixed holding cost. ## How do you set up a WTI hedge on Liquid? 1. **Define what can hurt you.** Falling investment value or sale revenue suggests a short; rising purchase costs suggest a long. 2. **Match the benchmark and horizon.** Record the grade, quantity, delivery date, and how the exposure is priced. 3. **Open the [WTI CL market](https://app.liquid.trade/trade/xyz:CL).** Choose long or short and check the order-size units. 4. **Choose the hedge notional.** Account for any existing hedges before adding a new one. Set collateral separately from exposure size. 5. **Review execution and margin.** Check spread, depth, funding, fees, and the estimated liquidation price in an adverse move. 6. **Reconcile the hedge with the real exposure.** Resize as production, purchases, or portfolio holdings change; close or reduce it when the exposure ends. If you use a [stop loss](/learn/what-is-a-stop-loss), plan for the exposure left behind after it triggers. Stops can slip, and closing the hedge does not close a physical supply contract or brokerage position. For another industrial commodity, see [how to hedge copper 24/7](/learn/how-to-hedge-copper-24-7). For the instrument itself, read [what the markets on Liquid represent](/learn/what-every-market-on-liquid-is). [Review the oil market →](/markets/oil) · [Open WTI on Liquid →](https://app.liquid.trade/trade/xyz:CL)