Market volatility is increasing, while U.S.
One of the things that has changed since the last piece was the launch of Micro WTI Crude Oil futures from CME Group, which is one-tenth the size of the standard crude contract. With the recent spike in crude oil volatility, the circumstances have changed, and so have the rankings. I thought this might be valuable due to the fact that some of the most important data in the oil markets is released weekly and a breakdown of that data can be nuanced, given different circumstances. "Crude oil is a pure supply and demand market, but the dynamics of both supply and demand can shift based on many factors," says trader Bob Iaccino.Ī while back, I put together a "power ranking" for crude oil fundamental data, sort of an active trader's guide for what to focus on when trading crude. The most important trading venue for European Brent Crude Oil is the International Petroleum Exchange in London.For market participants trading Micro WTI Crude Oil futures, Bob Iaccino ranks the top 5 data points to consider. Other reference oil types include Leona, Tijuana, Alaska North Slope, Zueitina or Urals. The reference oil traded most frequently and of major significance for the USA is West Texas Intermediate (WTI), while the most important in Asia is Dubai Fateh. These are standardised products used to determine the prices for all other types. For the purposes of trading on futures exchanges in London or New York, however, reference oils are used. The types of crude oil come from regions as diverse as Alaska North Lope, Arab Light or Zueitina in Libya. On an international level there are a number of different types of crude oil, each of which have different properties and prices. In December 2005 the global demand for crude oil was 83.3 million barrels per day according to the International Energy Agency (IEA) and this will continue to rise further. The US investment bank Goldman Sachs estimates the proportion of crude oil used for primary materials production to be 45 per cent.īecause the crude oil industry has developed hardly at all in recent years due to a lack of investment capital for discovery, extraction and further processing, global production can barely meet the high demand for crude oil from countries such as the USA, China or India.
Because crude oil is needed to manufacture other primary materials, it is the world’s most important commodity. Because the supply of crude oil is limited but demand is constantly increasing, the price of oil is also continuously rising. Crude oil is also used in cosmetics and medicines. From there, the crude oil is transported by tanker.īesides its primary role as the most important energy source, crude oil is also an essential raw material for manufacturing plastics. Brent Crude is a particularly light crude oil which is carried from the North Sea to the Sullom Voe Terminal on Mainland, Shetland by an underwater pipeline.
The most important type of crude oil used in Europe is Brent Crude, named after the North Sea oilfield where it is extracted. The commodity of crude oil is by far the world’s most important energy source and the price of oil therefore plays an important role in industrial and economic development.
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