Crude Oil Futures Market Facts

Unrefined oil, or "crude oil" is the most-traded physical commodity. It has two main trading types being traded as futures; Light Sweet Crude on NYMEX and Brent Crude in the UK (foregoing Dubai).

Many industries rely on crude oil for the production of jet fuel, gasoline and diesel for transportation and the movement of goods and services, and for heating oil.

As an industrial energy - crude oil supplies, reserves, and future exploration efforts are inherently linked with, and enable large scale economic growth. Not only for energy but for its use in manufacturing for everyday products such as fertilizers, solvents, pesticides and plastics. As well as for hydrocarbon-based lubricants and asphalt.

Consumption levels are highest in the United States, China, Japan and Russia.

Formation of crude - reservoirs form underground when hydrocarbons become trapped between rock layers. This normally occurs in a characteristic pattern, the crude settling between a lower level of water and another level of natural gas risen above.

Per 2007, the main producing oil nations are Saudi Arabia¹, Russia, the United States, and Iran².

With supplies showing signs of starting to dwindle, and, with world market needs ever increasing, the question of peak oil looms. Exploration techniques and the maintaining of reliable supply lines now play a most important role.

Efforts have begun focusing on extracting the oil from tar sands, and within shale fields and also in regions where prior efforts may not have proved economical. And also deposit containing regions that weren't drilled largely for controversial, environmental reasons such as offshore drilling.

^1,2 OPEC countries

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Consumption - shifts in the consumption of crude are destined, given its limited supply. As new replacements are sought, intended to lessen dependency on foreign oil, these movements will affect relevant market figures.

Crude oil consumer alternatives - the hybrid and hydrogen or electric vehicle are starting to come into their own. Examples are the Chevrolet Volt (priced at $40,000) and the Ford Focus plug-in hybrid, due to arrive in 2011. And as manufacturers gear up for scaled production, reducing costs, and market competition increases, with batteries becoming improved, demand for crude is projected to become greater and greater impacted.

This, while many synthetic lubricants have gained adaptation by consumers and are gaining market share.

Crude oil industrial energy alternatives - the combination of biofuel, wind, hydrogen and solar cell power have all more or less proven to be viable alternates. Yet still stationed on the proving grounds, none are yet in full swing, although their adaptation by industry is strengthening. The mega hydroelectric operations, once in place, supply enormous needs and are spotted around though globe - however limited by geographic usefulness they are. Clean burning coal, remarkably has attracted many proponents, and for good reason - vast reserves reside within United States borders, and results are proven, albeit with skyrocketing conversions costs. All of which means that nuclear power generation is likely to stay around for quite some time, if not for a debatable period (noting that many U.S. nuclear sites must undergo serious updating in the near term, no question about it).

Crude oil is commonly used in industry, to make:

Synthetic rubber, like for tires, made of petroleum. Same for shoe soles.

Plastics, from petrochemicals. That is known to take millions of barrels alone per year.

Certain medicines and vitamins that require petrochemicals

Many acrylic fibers are petroleum-based. Rugs for example. As is nylon & polyester.

Ethylene, from distilled oil, is used in the making of photographic film. A fact less important now with the advent of digital photography.

Crude industrial manufacturing alternatives - a refuge might be found in the conversion of biomass materials - such as from algae, trees and corn plants - that are turned into feedstocks to serve as plastic replacements. Yet another promising declaration comes from Case Western Reserve where a non-plastic foam material has been developed. Dubbed an "aerogel", and made of clay, polymer, and almost all air, the clay aerogel promises to replace the role of plastics in certain products, such as those found in building insulation and packaging materials. It might also find use in oil-spill cleanup. The new material offers swift biodegration, contrary to oil-based products.

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NYMEX is the largest trading exchange for crude oil futures contracts. International Petroleum Exchange in the United Kingdom (changed to ICE).

For added details on energy markets Heating Oil Futures and the resource Trading Natural Gas Futures - Market in addition to our Crude Oil Market provide further information.