Oil OIL

Crude Oil is a natural occurring petroleum commodity. It is formed over millions of years and is made up of hydrocarbon deposits and other organic materials from the remains of animals and plants. Having been covered in layers of loam and rock, the mixture is subjected to extreme heat and pressure which eventually turns it into a fossil fuel. The product is then extracted through the drilling process and is refined into various usable products for the petrochemical industry.

Like most non-renewable resources and commodities, the price of Crude Oil is heavily influenced by supply and demand. This commodity’s supply and demand rates are influenced in turn by a wide range of geological, legal, technological, and political elements. The price fluctuations of Crude Oil can have a wider impact on the global economy.

There are two major crude oil contracts which are important benchmarks for the price of oil – Brent Oil and West Texas Intermediate (WTI). Oil is traded as a spot on the CME exchange and is derived from the Crude Oil expiry future. The weight of the nearest futures contract decreases as it draws near its expiry date and the price gradually moves towards the price of the next contract.

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