Crude Oil WTI Sep '16 (CLU16)
|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) trended lower the first half of 2017 and posted a 1-1/2 year low of $42.05 a barrel in June. Ramped up U.S. shale-oil production pushed U.S. oil stockpiles to a record high of 535.5 million bbl (data from 1982) in late-March 2017, which kept crude prices under pressure. Also, supplies at Cushing, Oklahoma, delivery point for WTI futures, climbed to a record high of 69.42 million bbl (data from 2004) in April. Despite success by OPEC and non-OPEC members in reducing their crude output, rallies were limited the first half of the year on concern about increased Libyan and U.S. crude production. In June, Libya's crude production rose to a 4-year high of 902,000 barrels per day (bpd), and Baker Hughes reported that U.S. oil drillers had added rigs to oil fields for 24 consecutive weeks, the longest run in 30 years. Crude prices stabilized in Q3 and then trended higher the rest of the year. A weaker dollar pushed crude prices higher as the dollar index tumbled to a 3-year low in September. Strength in the global economy was also supportive for crude prices after the IEA in July raised its global 2017 oil demand estimate by 100,000 bpd to 1.4 million bpd, the strongest in 2 years. In November, OPEC and non-OPEC members extended their 1.8 million bpd crude production cut agreement by nine months through Q4-2018. Crude prices rallied despite the surge in U.S. crude production to a 46-year high of 9.897 million bpd the week of Dec 15. Crude oil posted a 2-1/2 year high in December at $60.51 a barrel and finished the year up +12.5% at $60.42 a barrel.
Supply - World crude oil production in 2015 rose +2.6% yr/yr to 80.043 million barrels per day, which was a new record high. The world's largest oil producers in 2015 were Russia with 12.8%, Saudi Arabia with 12.6%, the United States with 11.8%, China with 5.3%, Iraq with 5.1%, and Canada with 4.6%. 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% to 1.105 million barrels per day.
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