Traders primarily use two benchmarks: West Texas Intermediate (WTI) , traded on the NYMEX , and Brent Crude , traded on the ICE.
At its core, a long position in an oil futures contract is a binding agreement to purchase 1,000 barrels of crude oil (for standard contracts like WTI) at a set price on a designated expiration date. buy oil futures
One of the most attractive—yet dangerous—features of futures is leverage . An investor does not pay for 1,000 barrels upfront. Instead, they deposit a "margin" (a small fraction of the total value) to gain full price exposure. An investor does not pay for 1,000 barrels upfront
While industrial buyers like refiners may take physical delivery, most retail and speculative traders use cash-settled contracts or close their positions before the expiration date to avoid receiving actual barrels of oil. Strategic Objectives: Hedging and Speculation Strategic Objectives: Hedging and Speculation