Trading Crude Oil Futures (Part II)
December 2nd, 2009
Crude oil trades around the world. Crude oil is one of the most heavily traded commodities in the world. Every day perhaps billions of dollars worth of crude oil gets traded. New York Mercantile Exchange (NYMEX) is considered to be the hub of crude oil trading in the world.
Ever heard of Light Sweet Crude? Light Sweet Crude is the high grade, low sulfur content crude oil that is more easily refined than the thicker oils. Now oil coming out of some of the Venezuelan and Saudi Arabian Oil wells contains high sulfur content and requires special refineries that only process the high grade sulfur crude oil.
Ever heard of Light Sweet Crude? Sulfur content in oil is considered to be very important. Lower the sulfur content in crude oil, the easier and less costly will be its refining. The higher the sulfur content in the crude oil, the more expensive its refining will be. Light Sweet Crude is the high grade, low sulfur content crude oil that is more easily refined than the thicker oils. Now crude oil coming out of some of the Venezuelan and Saudi Arabian Oil wells contains high sulfur content and requires special refineries that only process the high grade sulfur crude oil. On the other hand Iraqi oil is close to the ground and has very low sulfur content.
At NYMEX, you can trade crude oil futures contracts based on Dubai Crude Oil, Brent North Sea Crude Oil, differential between the light sweet crude oil and the four domestic grades of crude oil and a few more. Oil options are also traded on NYMEX. Now Dubai Crude Oil Futures contract is very popular. So, NYMEX offers you a host of futures as well as options contracts based on crude oil.
The E-mini crude oil contract trades on the Chicago Mercantile Exchange (CME) GLOBEX platform and is cleared at NYMEX. It is based on 500 barrels of crude oil. Now as a retail trader, you can trade the E-Mini crude oil contract. If you have been dabbling into futures trading than you must know that futures trading is risky and can easily wipe out the capital in your trading account in a matter of minutes. So what to do? One and easy option is to stay away from the crude oil futures trading. The more difficult option is to first learn futures trading do some paper trading and only then venture into this difficult proposition. Read the whole article, I will give you a very good solution at the end. The NYMEX contract for the light sweet crude is the most liquid of all the crude oil contracts. A standard crude oil contract is based on 1,000 barrels of crude oil that will be delivered to Cushing Oklahoma if not settled in cash before the expiry of the contract. Now trading at NYMEX can be through open outcry during the regular treading hours as well as electronic web based trading after hours. A barrel of oil contains 42 US gallons. Crude oil is traded in US dollars per barrel. In other words, the price of crude oil is quoted in US dollars per barrel.
A barrel of oil contains 42 US gallons. Crude oil is traded in US dollars per barrel. In other words, the price of crude oil is quoted in US dollars per barrel. Now trading at NYMEX can be through open outcry during the regular treading hours as well as electronic web based trading after hours.
Open outcry trading takes place between 10: 00 AM EST to 2:30 PM EST. After hour trading takes place on NYMEX ACCESSS system, an internet based trading platform starting at 3:15 PM EST Monday through Thursday and ending at 9:30 AM EST the following day. Sunday trading starts at 6:00 PM EST. It’s always good to visit the website of the exchange to know more. You can visit the website of NYMEX and read a more about the crude oil trading that takes place at that exchange. Trading oil markets requires constant vigil on your part in monitoring the global supply and demand of crude oil. You will need to know which country supplies how much and what the productions quotas are for the time being. This is pretty scary stuff. Now you must know this thing that real companies have huge trading desks with hundreds of traders all betting on the price of oil. Oil markets are about real people trying to figure out how much oil they would need in the next few months to years to run their businesses regardless of whether they are suppliers or users. Trading crude oil futures contracts require you to be in tune with the market sentiment. Trends in crude oil market don’t develop suddenly and they don’t reverse suddenly. This is something good for you as a crude oil futures trader.
When a trend in the crude oil market develops, it may last for a few months to a year. It all depends on the global supply and demand situation of the crude oil. If you can spot a trend in the crude oil market in its early stage and ride it till its reversal, you can make a good profit. Now, just keep this in mind that crude oil prices are highly susceptible to global geopolitical situation and react violently to any political global uncertainty. As a crude oil futures trader you will need to know how to handle the seasonal cycle in the oil market as well as the weekly cycle. Now every week usually on Wednesday the American Petroleum Institute (API) and the US Energy Information Agency (EIA) releases their weekly supply data reports. If you want to trade crude oil futures than you should know Mark Soberman! What you need to do is click on the link on the left that says FREE EVIL GENIUS TRADING KIT. This trading kit is from Mark Soberman. Don’t worry its 100% safe and legal. You only need to come out of your comfort zone. Download the free kit and find a unique method to trade the crude oil futures!
Mr. Ahmad Hassam is a Harvard University Graduate. Trade Dow Futures . Learn Commodity Trading ! Get a totally unique version of this article from our article submission service