MCX CRUDE OIL TIPS - CRUDEONLY

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Oil is the world economy’s most important source of energy and is therefore critical to economic growth. Crude oil is a central part of modern life and the world’s most important energy resource. Its value is driven by demand for refined petroleum products, particularly in the transportation sector. Petroleum products power virtually all motor vehicles, aircraft, marine vessels, and trains around the globe. In total, products derived from oil, such as motor gasoline, jet fuel, diesel fuel, and heating oil, supply 33% of all the energy consumed by households, businesses, and manufacturers worldwide.  Crude oils have various attributes that make them more or less attractive to refiners. As with the crude oil market, there exists a dynamic relationship between current prices and prices for petroleum products to be delivered in the future. A change in the futures price of gasoline or heating oil to be delivered some months in the future can lead to a similar change in the price paid for the same product to be delivered next month.

The largest sources of supply are in Saudi Arabia, Russia, the United States, China, Canada, and Iran. Within the United States, the largest areas of production are Texas, the Gulf of Mexico, North Dakota, California, and Alaska. Futures markets bring a number of benefits to the global oil market. First, crude oil futures markets provide information about future expectations regarding supply and demand conditions.

                                   

Crude oil can be classified as either light or heavy depending on its API gravity (or density). Generally, the higher its API gravity, the lower its density. Oil that is lighter in colour, has a thin consistency and flows easily usually contains less metals and sulphur compounds. It is known as light oil. Oil that is high in metal and sulphur content is considered low-grade oil. It generally has too much carbon, not enough hydrogen and is more time consuming to produce and hard to refine. It is known as heavy oil. Crude oil can also be classified as either sour or sweet, depending on the amount of sulphur it contains. The way people live, work and travel all depend on oil. Oil is, in fact, the world’s most important transportation fuel. About 90% of all transportation fuels come from crude oil. Crude oil found underground is usually mixed with water, sand, salt and natural gas. As it is extracted, the pressure of these different substances must be kept at just the right levels.