Marketing and trading of crude oil
Crude oil is one of the most economically mature commodity markets in the world. Even though most crude oil is produced by a relatively small number of companies, and often in remote locations that are very far from the point of consumption, trade in crude oil is robust and global in nature. Oil traders are able to quickly redirect transactions towards markets where prices are higher. Oil and coal are global commodities that are shipped all over the world. Thus, global supply and marketing and trading of crude oil determines prices for these energy sources.
Events around the world can affect our prices at home for oil-based energy such as gasoline and heating oil. Oil prices are high right now because of rapidly growing demand in the developing world primarily Asia. As demand in these places grows, more oil cargoes head towards these countries. Prices in other countries must rise as a result. Political unrest in some marketing and trading of crude oil nations also contributes to high prices - basically, there is a fear that political instability could shut down oil production in these countries.
OPEC, the large oil-producing cartel, does have some ability to influence world prices, but OPEC's influence in the world oil market is shrinking rapidly as new supplies in non-OPEC countries are discovered and developed. As shown in Figure 1. The first phase was marked largely by intra-company transactions with occasional inter-company "spot" sales.
The second was defined by the emergence of OPEC and its attempts to influence an increasingly global oil trade for political ends. The third is defined by commoditization of oil markets, with regional prices linked by inter-regional trade and the development of sophisticated financial instruments such as futures and option contracts, which we'll discuss in more detail below. Our discussion of the world market for crude oil will be broken into a few sections.
Marketing and trading of crude oil will first focus on what's called marketing and trading of crude oil "spot" and "forward" market for crude oil. The term "spot market" generally refers to a short-term commodity transaction where the physical commodity changes hands very soon after the seller receives payment. Most retail consumer purchases are examples of spot transactions. When I buy a newspaper at the convenience store or a slice of pizza at the pizza shop, I get the product right after I pay for it.
Forward markets refer to contracts where buyers and sellers agree up-front on a price for a commodity that will be delivered at some point in the future. When I subscribe to the newspaper and have it delivered to my house every day, I am marketing and trading of crude oil a type of forward contract with the newspaper company. When I call the pizza shop and ask them to deliver a pizza to my house one hour or one day from now, then I marketing and trading of crude oil also engaging in a type of forward contract.
We will also discuss "futures" markets for crude oil. The difference between futures and forward markets can be confusing at times. The primary difference is that a futures contract is a highly standardized commodity sold through a financial exchange, rather than a highly customizable contract bought and sold through one-on-one transactions.
Futures markets do have the advantage that they have been able to attract many more buyers and sellers than forward markets. Finally, we will spend time in this lesson learning where to find data on global oil markets and discussing the issue of "peak oil" - whether world oil reserves are dwindling or whether there is actually enough to support rising oil consumption over the coming decades.
There is more data on the web that you might think, but the difficulty is in knowing where to find exactly what you are looking for. Skip to main content. Introduction to Global Markets for Crude Oil Print Crude oil is one of the most economically mature commodity markets in the world.
Three phases of the world oil market.
Our vision at Chevron is to be the global energy company most admired for it's people, partnership, and marketing and trading of crude oil. To realize this vision, we want to build relationships based on collaboration and trust, and deliver superior performance in the crude oil marketplace. Marketing crude oil production at the lease or export point is not always your first concern. Chevron can provide a competitive market for your crude. Marketing and trading of crude oil understand your business.
Chevron has been in the business of finding, producing, trading, and refining crude oil for over years. Our corporate values are explicitly based on integrity and trust. We believe this strengthens long-term relationships and drives superior performance.
We can leverage our relationships to your advantage. Chevron has a proven track record in the crude oil marketing business. We purchase and market significant crude oil production volumes for a wide spectrum of producers and royalty owners. We are the sole trading partner for our Upstream and Downstream affiliates. About Crude Oil Marketing. Crude Marketing Services Purchasing: Chevron's large and diverse portfolio allows us to offer multiple pricing mechanisms across many regions.
Among the more popular are: With Trading and Scheduling marketing and trading of crude oil, Chevron stands ready to transport and market your crude oil. Chevron's business serves as a platform for extending Division Order and Accounting Services to our U. Timely and pertinent market analysis supports our operation which markets Upstream crude and supplies a large refinery complex.
We can bring this analysis to you. Our business model stems from a strong, asset-based Balance Sheet.