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- Spread NYMEX WTI with other liquid NYMEX energy benchmarks to easily capture inherent price relationships, and get cross-margin savings, operational efficiencies, and lower costs.
www.cmegroup.com/markets/energy/crude-oil/light-sweet-crude.html
2 days ago · Spread NYMEX WTI with other liquid NYMEX energy benchmarks to easily capture inherent price relationships, and get cross-margin savings, operational efficiencies, and lower costs.
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Spread NYMEX WTI with other liquid NYMEX energy benchmarks...
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- The Differences in Crude Oil
- The Main Benchmarks
- Importance of The Derivatives Market
- The Bottom Line
There are different types of crude oil—the thick, unprocessed liquid that drillers extract below the earth—and some are more desirable than others. For instance, it’s easier for refiners to make gasoline and diesel fuel out of low-sulfur or “sweet” crudethan oil with high-sulfur concentrations. Low-density, or “light” crude is generally favorable t...
There are dozens of different oil benchmarks, with each one representing crude oil from a particular part of the globe. However, the price of most of them are pegged to one of the following three primary benchmarks:
Crude Futures
There was once a time when buyers would primarily purchase crude oil on the spot market—that is, they’d pay the current price and accept delivery within a few weeks. However, after the oil crisis of the late 1970s, refiners and government buyers began looking for a way to minimize the risk of sudden price increases. The solution came in the form of crude oil futures, which are tied to a specific benchmark crude. With futures, buyers can lock in the price of a commodity several months, or even...
Crude Options
In addition to futures, market participants can also invest in options that are linked to a particular crude benchmark. These derivatives are another important way to help mitigate price risk. Should the value of a certain crude marker skyrocket, the owner of a call optionwould have the right— though not the obligation—to buy a specific number of barrels at a pre-determined price.
Speculative Trading
However, not all futures or options tied to a crude benchmark are used for hedging purposes. Speculators are also major players in the market, betting that changes to supply or demand will drive the price of certain crude products higher or lower. Investors can also gamble on what will happen to the difference, or spread, between two benchmarks. Participants typically analyze the fundamentals of a specific oil source and guess whether the gap between two markers will widen or close. Like trad...
The market for crude is incredibly diverse, with the quality and original location of the oil making a major impact on price. Because they’re relatively stable, most crude oil prices worldwide are pegged to the Brent, WTI, or Dubai benchmarks.
In 1983, US WTI became a benchmark after it was selected as the main reference grade for the new NYMEX crude oil futures contract and evolved as the global marker. Dubai and Oman developed as key price links for oil sales to Asia.
The strength in WTI prices helped to temporarily slow export demand; cash values and NYMEX spreads declined into expiration as international buyers looked elsewhere or delayed purchases. Despite the emergency supplies that the International Energy Agency members added, crude oil markets remained under stress through the summer.
Sep 25, 2023 · Gasoline and heating oil futures trade on NYMEX, and crack spreads measure the oil products against the WTI NYMEX crude oil futures. The heating oil futures are a proxy for the other distillate products.
The WTI futures that trade on the CME’s NYMEX division is the preferred crude oil for gasoline refining. WTI is the benchmark pricing mechanism for approximately one-third of the world’s crude oil.
People also ask
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May 13, 2020 · This paper provides further information on the strengths of Cushing as both a trading and storage hub, most notably its pipeline connectivity, storage logistics, and price discovery role as a global benchmark.
