What is crude oil futures? Introduction to crude oil futures


Crude oil futures are the most important oil futures. At present, there are four important crude oil futures contracts in the world: New York commercial exchange (NYMEX) light and low sulfur crude oil "West Texas Intermediate oil" futures contract, high sulfur crude oil futures contract, London International Petroleum Exchange (IPE) Brent crude oil futures contract, Singapore Exchange (SGX) Dubai sour crude oil futures contract.

Oil futures is a kind of futures with forward oil price as the subject matter. It is a kind of trade in futures trading. The standardized contract with crude oil as the target is formulated by the futures exchange. The oil crisis occurred in the early 1970s brought great impact to the world oil market, and the sharp fluctuation of oil price directly led to the emergence of oil futures, Its trading volume has been showing a rapid growth trend, has surpassed metal futures, is an important part of the international futures market

Among the oil futures contracts, crude oil futures are the most trading volume. At present, there are three kinds of crude oil futures contracts with the largest trading volume and the most extensive influence in the world: the New York commercial exchange (NYMEX) light and low sulfur crude oil (WTI) futures contract, London International Petroleum exchange (ice) Brent (North Sea Brent crude oil) futures contract, And Singapore International Financial Exchange (SIMEX) Dubai (Dubai crude oil) futures contract.

Other product oil futures include distillate oil, unleaded gasoline, gas oil, heating oil, fuel oil, light diesel oil, etc.

International crude oil trading mainly adopts the pricing method of base price + / - discount, and the futures trading prices of WTI, Brent and Dubai are often used as the benchmark price. Take CME's WTI futures contract as an example, its specification is 1000 barrels per hand, the quotation unit is USD / barrel, and the minimum price fluctuation unit is 1 cent, It includes ans of the United States, Maya of Mexico, Oriente of Ecuador, SantaBarbara of Venezuela and Escalante of Argentina. The main crude oil of Brent is produced in Western Europe, Mediterranean and West Africa, For example, Russia's Urals, Libya's sarir and Nigeria's bonnylt are mainly linked to the crude oil produced in the Middle East, while the crude oil produced in the Far East mainly relies on the regional benchmark oils such as Minas, Cinta and duri.

According to the data of "oil and gas journal" of the United States, by the end of 2007, the proven recoverable reserves of global oil were 182.424 billion tons, an increase of 1.1% over the same period of last year, and the reserve production ratio was 50.4 years, The top five oil producing countries are Russia, Saudi Arabia, the United States, Iran and China.

As of January 1, 2002, the world's estimated proven oil reserves are 141.309 billion tons. Saudi Arabia ranks first in the world's oil reserves. In 2001, the global crude oil production was 3.18 billion tons, and the top five countries were Russia, Saudi Arabia, the United States, China and Norway, Oil is the blood of industrial production and an important strategic material. In order to safeguard their own interests, the world's oil producing countries established the organization of Petroleum Exporting Countries (OPEC) in September 1960, The total reserves of the world's oil reserves are 113 billion tons, 13% of the world's oil reserves are located in the capitals of Saudi Arabia, Saudi Arabia, Saudi Arabia and Libya, accounting for 13% of the world's oil reserves.

Trading varieties

In addition to crude oil futures, other types of oil futures include heating oil, fuel oil, gasoline, light diesel oil, etc

The following are the major oil exchanges in the world:

NYMEX: light oil, natural gas, unleaded gasoline, hot oil, Brent crude oil

Singapore Exchange: Middle East crude oil

Tokyo industrial products exchange: gasoline, kerosene, diesel, crude oil

British International Petroleum Exchange: Brent crude oil and diesel. After understanding the trading varieties and the major global dealers, we can learn about it

basic function

After several years of development, the three basic functions of oil futures market have been basically possessed.

First, price discovery. There are many commodity producers, operators and speculators in the futures market. They trade and influence each other on the basis of production cost plus expected profit. All traders analyze and forecast the future price of commodities, and form the expected benchmark oil price through organized public bidding, The futures price formed in the process of open competition and bidding is often regarded as the reference price in the international oil spot market. It has an important price guiding function and can guide the production and operation of enterprises to be more market-oriented and improve the allocation efficiency of social resources.

Hedging is one of the basic operation modes of oil futures market. Enterprises can achieve risk procurement by hedging, which can keep the production and operation costs or expected profits relatively stable, so as to enhance the ability of enterprises to resist the market price risk.

The basic method of hedging is to buy or sell oil commodity futures contracts with the same volume as the spot market, but with the opposite direction of trading, in order to offset the actual price risk caused by the price changes in the spot market by hedging or closing position compensation at some time in the future, Hedging can not completely eliminate the risk, but replace a larger risk with a smaller risk, and replace the risk of spot price change with the difference risk of spot price and futures price.

The third is to regulate speculation. Capital has a natural demand for speculation. The use of oil futures market can attract a large amount of funds, thus providing the first impetus for the development of the oil industry. By using the futures market, traders can avoid the negative impact of international oil price fluctuations, on the other hand, they can obtain more profits from the market price fluctuations through speculative transactions.

In the standard market, speculation is subject to strict supervision and management. Speculators obtain normal economic benefits under the condition of strictly following the trading rules. Supervision and management make speculation become a tool to regulate the futures market. With the participation of speculators, the trading volume of futures market increases, and the relationship between market supply and demand can be better regulated.

New York Futures Exchange light crude oil

Because of the strength of the U.S. as a super buyer of crude oil and the influence of the New York Futures Exchange, the trading of crude oil futures with WTI as the benchmark oil has become the leading trading volume in the global commodity futures. Generally speaking, the crude oil futures contract has good liquidity and high price transparency, which is one of the three benchmark prices in the world crude oil market, When the public and the media usually talk about how much the oil price breaks through, they mainly refer to this price.

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