Crude oil is a naturally-occurring substance found in
certain rock formations in the earth.
It is a dark, sticky liquid classified as a hydrocarbon. This
means, it is a compound containing mainly carbon and
Crude oil is highly flammable and can be burned to create
Crude oil is the most important source of energy
commodity at a international range and since all kinds of
transportation depend intensely on oil, the long run option
oil is of critical interest.
Crude oil is the world’s most actively traded commodity.
Light, sweet crudes are preferred by refiners because of
their low sulfur content and relatively high yields of high-
value products such as gasoline, diesel fuel, heating oil, and
History of Oil
The first commercial oil well drilled in Romania
The Indian petroleum industry is also one of the
oldest in the world, with Oil being struck at
Makum near Margherita in Assam in 1867.
In 1889 in Digboi in Assam first oil was struck by
Burma oil company.
Since the shift from coal to oil, the world has
consumed over 875 billion barrels. Another 1,000
billion barrels of proved and probable reserves
remains to be recovered.
Crude Oil Trading
Crude oil traded in most of the commodity
trading exchanges in all over the world . You can
trade Crude Oil futures at New York Mercantile
Exchange (NYMEX) and Tokyo Commodity
The MCX commodity investors and traders
also having the facility to trade with crude oil
futures . MCX crude oil future lot size is 100
barrel and margin is 5% of the lot valuation (
depending on the broker and market volatility).
Components of Oil
The exact molecular composition varies widely
from formation to formation but the
proportion of chemical elements vary over
fairly narrow limits as follows:
Carbon -- 83-87%
The petroleum industry generally classifies crude oil by:-
1. The geographic location it is produced in.
2. Its API gravity.
3. By its sulfur content.
Higher prices were supported by a number of factors.
One was the ongoing U.S. war on terrorism and rising
tensions with Iraq. There was the likely potential that
military action would be taken against Iraq that would
disrupt the supply of crude oil to the market. While
there were factors supporting higher prices, there were
also factors working against them. The Organization of
Petroleum Exporting Countries (OPEC) after Futures
Markets a meeting in 2001 agreed that production of oil
would be cut. The question was whether the non-OPEC
countries would act to support OPEC and cut production
of whether they would go ahead and try to gain market
share at the expense of OPEC.
Futures and options on light sweet crude oil are
traded on the New York Mercantile Exchange
(NYMEX) along with other energy products like
heating oil, unleaded gas, and natural gas.
London’s International Petroleum Exchange (IPE)
trades Brent crude oil futures and options. The
IPE also trades gasoil, natural gas and fuel oil.
The Singapore International Monetary
Exchange (SIMEX) trades Brent crude oil futures.
Crude Oil Units (average gravity)
1 US barrel = 42 US gallons.
1 US barrel = 158.98 litres.
1 tonne = 7.33 barrels .
1 short ton = 6.65 barrels .
Note: barrels per tonne vary from origin to origin.