preview

Essay Crude Oil

Decent Essays
CRUDE OIL For the past month and a half I have researched and followed Crude Oil prices in order to gain a better understanding of exactly what this commodity is, how it is traded, how it effects our overall market as well as our everyday lives. During this time I’ve learned the importance of understanding how and why commodities are traded everyday and will share with you exactly what I have learned from my research. In 1859 Colonel Drake stuck oil for the first time and became the first man to create an oil well in which he produced roughly 15 barrels of oil per day. Once word spread of this discovery you saw many men attempt to accomplish the same feat and create oil wells of their own. Some of oil’s first uses were as a lubricant…show more content…
As you can see the United States is the top importer and this is partially responsible for our trade deficit and our attempt to search for not only a more eco-friendly way to fuel automobiles (a large use of our oil) but also to limit our import. In taking a look at the contract specifications of trading Crude Oil as a commodity you may notice it is traded on the NYMEX market and there are certain restrictions on the minimum and maximum price fluctuations and the trading terms. These all have a tremendous effect on what the final price is set at each and everyday and are important to learn when studying this commodity. There are several factors that can effect the supply and demand for Crude Oil including OPEC and any rules and regulations they may set for trade, the ever changing inventory of oil as some countries are experiencing depletion and new countries are finding oil. There is also the relationship you hold with the country if you are an importer you must maintain good relations and if you are an exporter the ball is in your court as to how you decide to trade and also OPEC will often get involved if the country is involved. In the past month and a half I have seen oil prices stay relatively stable with some increase in prices during the summer months due to certain factors which may include summer driving months here in the United States all the way to the recent declines
Get Access