Oil is a crucial resource used to generate power and energy, essential for operating the machinery that supports our daily lives.
Often referred to as petroleum, oil is vital for consumers who rely on it for various everyday activities.
Companies, too, depend on oil to power their machinery and sustain production levels.
However, like many other market commodities, oil production varies by region, leading to the establishment of a global oil market to balance supply and demand.
Oil is traded primarily through oil futures contracts.
Futures are agreements between two parties to conduct a transaction at a specific future date and price.
These contracts are standardized to ensure consistency in quality, quantity, and transaction timing and are traded on regulated futures exchanges.
The New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE) are the principal markets for crude oil trading.
These exchanges operate under the oversight of the Financial Services Authority (FSA) in the UK and the Commodity Futures Trading Commission (CFTC) in the US.
The type of oil being produced influences both how and where it is traded.
Typically, when people refer to oil in the context of trading, they are discussing crude oil, the most commonly traded variety on international markets.
