Crude Oil WTI Aug '19 (CLQ19)
|Contract||Crude Oil West Texas Intermediate|
|Tick Size||1 cent per barrel ($10.00 per contract)|
|Daily Limit||7% above or below previous settlement|
|Contract Size||1,000 U.S. barrels (42,000 gallons)|
|Trading Months||All Months|
|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 International Petroleum Exchange in London (IPE). 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) traded sideways to higher into Q4-2018 on a weak dollar and the prospects for diminished global crude supplies. The dollar index sank to a 4-year low in February, which lifted the prices of most commodities priced in dollars. Meanwhile, global oil inventories continued to decline after OPEC+ in late-Nov 2017 extended their 2017 production cut agreement through 2018. Geopolitical concerns in the Middle East kept crude prices firm and the U.S. revived its sanctions against Iranian crude oil as of November. Also, the U.S. added additional sanctions on Venezuela, which further reduced global crude supplies. U.S. crude supplies at Cushing, Oklahoma, the delivery point for WTI futures, declined steadily into August to a 4-year low, which also underpinned crude prices. In October, crude prices jumped to a 4-year high of $76.90 a barrel on ramped up tensions between the U.S. and Saudi Arabia after Saudi Arabia implicitly threatened to use oil as a weapon if it incurred U.S. sanctions over the apparent murder of journalist Khashoggi. Crude prices then plunged into December to a 1-1/2 year low of $42.36 a barrel on increased supplies and global economic concerns. U.S. crude output rose steadily through 2018 and climbed to a record 11.7 million bpd the week ended November 9 and OPEC Nov crude production rose for a sixth month to a 2-year high of 33.15 million bpd. Weaker economic activity in China, the world's second-largest crude oil consumer, also weighed on crude oil prices after the China's Dec manufacturing PMI fell to a 3-year low of 49.4. Crude oil finished the year down -24.8% yr/yr at $45.41 a barrel.
Supply - World crude oil production in 2017 rose +0.3% yr/yr to 81.068 million barrels per day, which was a new record high. The world's largest oil producers in 2017 were Russia with 13.1% of the world production, Saudi Arabia with 12.5%, the United States with 11.5%, Iran & Iraq each with 5.5%, and Canada with 4.9%. U.S. crude oil production in 2017 rose by +5.0% yr/yr to 9.301 million barrels per day. Alaskan production in 2017 rose by +1.0% yr/yr to 494,656 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 2017 rose +2.5% yr/yr to 16.593 million barrels per day, which is a record high. 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 and imports in 2017 rose +0.8% yr/yr to 7.911 million barrels per day, although that is well below the 2005 record high of 10.126 million barrels. U.S. exports of crude oil in 2017 rose sharply by +87% yr/yr to 1.105 million barrels per day.
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