How are the overnight fees on Oil and Natural Gas calculated?

etoro offers spot CFD pricing on Oil and Natural Gas. This allows you to open positions that are not linked to a futures contract with a fixed expiry date.

Although these spot CFDs do not expire, their prices are based on the two upcoming futures contracts for the underlying commodity:

• Front contract: the futures contract with the closest expiry date
• Next contract: the futures contract with the second-closest expiry date

How Oil and Natural Gas Spot CFD prices are determined

At the start of each futures cycle, the Spot CFD price is aligned with the Front contract. As the Front contract moves closer to expiry, the Spot CFD price is gradually adjusted towards the Next contract price.

When the Front contract expires, the Next contract becomes the new Front contract, and the process starts again.

Why the Spot CFD price is gradually adjusted

In addition to regular market movement, the Spot CFD price is gradually adjusted as the Front contract approaches expiry, moving towards the Next contract price.

This creates a continuous Spot CFD price after the Front contract expires, without closing or replacing your position.

How the 'Spot Price Adjustment' works

The 'Spot Price Adjustment' is designed to offset the daily profit or loss resulting from the movement of the Front contract price towards the Next contract price.

The adjustment is based on the difference between the Front contract and the Next contract.

How the overnight fee is calculated

The overnight fee for Oil and Natural Gas Spot CFD positions is calculated using a formula with the following parts:

• Price: The current Spot CFD price. The annual 5% rate is applied to this price and then divided by 365 to calculate the daily financing charge.
• NumDays: The number of days between the expiry date of the Front contract and the expiry date of the Next contract. The Spot Price Adjustment is spread across this number of days.
• Next – Front: The difference between the next contract price and the front contract price. This determines the daily Spot Price Adjustment.
• Units: The number of units in the position. The fee is multiplied by this number.

Formula for buy positions

{[(5% × Price) / 365] + [1 / NumDays × (Next – Front)]} × Units

Formula for short positions

{[(5% × Price) / 365] – [1 / NumDays × (Next – Front)]} × Units

Important to know

The formulas above apply to an upward sloping futures curve, where the Next contract price is higher than the Front contract price.

On a downward sloping futures curve, the overnight fees for buy and short positions are reversed.

Review the full list of applicable fees on the etoro fees page