Oil prices is an important indicator of International crude oil trade, as well as the intermediate petroleum products and the finished products trade, which are centralized in two markets, located in New York NYMEX and London’s ICE. There are other places, but they only relay these two markets through the Internet.
The listing of different crudes is refreshed every day and most oil produces company are subscribed to the pages issued by Reuters and Platt’s Oilgram Price Reports that provide this listing. In Europe, on the basis of the data provided by Platts, oil traders negotiate with Asia in the morning and, after the opening of the New York market, with the United States later in the evening until about 11 pm.
This trading system is comparable to the financial markets.
Indeed, the value of a given quantity of crude, usually one metric ton, reflects the FOB (free on board) price of the gross plus transportation costs (freight), insurance, the impact of loss, the cost of refining, and a certain profit margin for the refiner. Thus, there is always a correlation between the price of finished products and FOB price.
This valuation is done every day by interposed calculation in order to know the daily market value of each of the grades of crude on the market. As for the stock exchanges, transactions between traders are made by telephone or over the Internet and are confirmed by fax or email.
As for financial markets, there is also a futures market. In this market, the crude is bought or sold by lot, at one or more months delivery in advance. It is the same for intermediate products such as naphtha or kerosene, or for finished products such as fuels, jet fuel, diesel, or heavy fuel oil.
In a word, everything that has been made from crude, including residues, is salable and buyable.
World consumption in 2008 was estimated at 86.5 million barrels per day (bpd), with a current price between 65 and 145 U.S. dollars this year, it is a daily market ranging from about 5.6 billion to 13.5 billion. The daily production of OPEC in September 2008 is 32.47 million barrels per day. These values were relatively very important in the 1980s, have become of much smaller financial importance for transactions in the 2000s.
If you are planning to compose a top-notch research proposal on the subject, it can be helpful to use free sample research paper topics on oil prices, which will let you know that crude oil and its products can be sold as FOB (free on board) or CIF (Cost, Insurance and Freight). In the first case it is the buyer who pays the charges after purchase (expense corresponding to the charter of the ship, freight, and cargo insurance) and in the second case it is the seller who pays the bills; in the first case the price is lower.
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