Crude Oil WTI Apr '20 (CLJ20)
|Contract||Crude Oil West Texas Intermediate|
|Tick Size||1 cent per barrel ($10.00 per contract)|
|Daily Limit||15% above or below previous settlement|
|Contract Size||1,000 U.S. barrels (42,000 gallons)|
|Trading Hours||5:00p.m. - 4:00p.m. (Sun-Fri) (RTH 8:00a.m. - 1:30p.m.) (Settles 1:30p.m.) CST|
|Value of One Futures Unit||$1,000|
|Value of One Options Unit||$1,000|
|Last Trading Day||Trading terminates at the close of business on the third business day prior to the 25th calendar day of the month preceding the delivery month|
Crude oil is petroleum that is acquired directly from the ground. Crude oil was formed millions of years ago from the remains of tiny aquatic plants and animals that lived in ancient seas. Ancient societies such as the Persians, 10th century Sumatrans, and pre-Columbian Indians believed that crude oil had medicinal benefits. Around 4,000 BC in Mesopotamia, bitumen, a tarry crude, was used as caulking for ships, as a setting for jewels and mosaics, and as an adhesive to secure weapon handles. The walls of Babylon and the famed pyramids were held together with bitumen, and Egyptians used it for embalming. During the 19th century in America, an oil find was often met with dismay. Pioneers, who dug wells to find water or brine, were disappointed when they struck oil. It wasn't until 1854, with the invention of the kerosene lamp, that the first large-scale demand for petroleum emerged. Crude oil is a relatively abundant commodity. The world has produced approximately 650 billion barrels of oil, but another trillion barrels of proved reserves have yet to be extracted. Crude oil was the world's first trillion-dollar industry and accounts for the single largest product in world trade.
Futures and options on crude oil trade at the CME Group and at the ICE Futures Europe exchange in London. The CME trades two main types of crude oil: light sweet crude oil and Brent crude oil. The light sweet futures contract calls for the delivery of 1,000 barrels of crude oil in Cushing, Oklahoma. Light sweet crude is preferred by refiners because of its low sulfur content and relatively high yield of high-value products such as gasoline, diesel fuel, heating oil, and jet fuel. The Brent blend crude is based on a light, sweet North Sea crude oil. Brent blend crude production is approximately 500,000 barrels per day and is shipped from Sullom Voe in the Shetland Islands.
Prices - CME West-Texas Intermediate (WTI) crude oil prices (Barchart.com symbol CL) trended higher into Q2-2019 and posted the high for the year in April of $66.60 per barrel. Concern about tighter global supplies led crude oil prices higher after the U.S. tightened sanctions on Iran, sharply reducing its ability to export crude oil. Also, U.S. sanctions on Venezuela and the conflict in Libya squeezed global oil supplies even more. Crude oil prices then retreated to the low for 2019 at $50.60 a barrel in June on concern that the ongoing U.S.-China trade war would undercut global economic growth and energy demand. The International Energy Agency (IEA) reported that global crude oil consumption increased by only 520,000 bpd during January-May 2019, half the rate seen the previous year and the slowest for the period since 2008. Crude oil prices then pushed above $60 a barrel in September 2019 on heightened geopolitical tensions after Houthi rebels launched drone attacks on the world's largest oil-processing plant in Saudi Arabia and temporarily knocked out more than 5 million bpd of Saudi oil production. Because of the attack, OPEC Sep crude production fell to a 9-year low of 28.59 million bpd. However, Saudi crude production soon recovered, and prices fell back toward $50 per barrel. Also, the dollar index rallied to a 2-1/2 year high in October 2019, which was negative for crude oil prices. Oil prices were also undercut by ramped-up shale oil drilling as U.S. crude production rose to a record high of 12.9 million bpd in November. Crude oil prices, however, rallied back above $60 per barrel after the U.S. and China agreed to a phase-one trade deal in December 2019, and as U.S.-Iran military tensions remained high. Crude oil finished the year up +34.5% yr/yr at $61.06 a barrel.
Supply - World crude oil supply in 2019 fell by -0.7% yr/yr to 101.2 million bpd in December 2019 from 101.9 million bpd at the end of 2018. U.S. crude oil production in 2019 rose by +11.3% yr/yr to 12.238 million barrels per day. Alaskan oil production in 2019 fell by -2.7% yr/yr to 485,893 barrels per day and was far below the peak level of 2.017 million barrels per day seen in 1988.
Demand - U.S. demand for crude oil in 2019 fell by -2.4% yr/yr to 16.569 million barrels per day. Most of that demand went for U.S. refinery production of products such as gasoline fuel, diesel fuel, aviation fuel, heating oil, kerosene, asphalt, and lubricants.
Trade - The U.S. is still highly dependent on imports of crude oil to meet its energy needs, but imports in 2019 fell by -12.7% yr/yr to 6.780 million barrels per day, down sharply from the 2005 record high of 10.126 million barrels. U.S. exports of crude oil in 2019 rose by +45.3% yr/yr to 2.975 million barrels per day.
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