Crude oil is crude oil extracted directly from the ground. Crude oil was formed millions of years ago from the remains of tiny aquatic plants and animals that lived in ancient seas. Ancient societies such as the Persians, 10th century Sumatrans, and pre-Columbian Indians believed that crude oil had medicinal benefits. Around 4,000 BC. Bitumen, a crude oil of tar, was used in Mesopotamia as a waterproofing agent for ships, as a backdrop for jewelry and mosaics, and as an adhesive to secure weapon handles. The walls of Babylon and the famous pyramids were held together with bitumen, and the Egyptians used it for embalming. During the 19th century, an oil discovery in America was often received with dismay. Pioneers who dug wells for water or brine were disappointed when they came across oil. It was not until 1854, with the invention of the kerosene lamp, that the first great demand for crude oil arose.

Crude oil is a relatively abundant raw material. The world has produced about 650 billion barrels of oil, but another trillion barrels of proven reserves has yet to be extracted. Crude oil was the world`s largest trillion-dollar industry and is the largest product of world trade. Futures and options on crude oil trading on the CME Group and on the ICE Futures Europe Stock Exchange in London. The CME trades two main types of crude oil: light sweet crude and Brent crude. The light futures contract calls for the delivery of 1,000 barrels of crude oil to Cushing, Oklahoma. Light sweet crude oil is preferred by refineries because of its low sulfur content and relatively high yield of high-quality products such as gasoline, diesel fuel, heating distillate oil and kerosene. Brent Blend crude oil is based on light, sweet crude oil from the North Sea. Brent crude oil production is about 500,000 barrels per day and is shipped from Sullom Voe to the Shetland Islands. Prices – CmE West-Texas Intermediate (WTI) Crude oil prices (symbol Barchart.com CL) followed an upward trend in Q2-2019, reaching an annual high of $66.60 per barrel in April.

Concerns about tightening global supply have led to higher crude oil prices after the United States tightened sanctions on Iran and sharply reduced its ability to export crude. U.S. sanctions against Venezuela and the conflict in Libya are also putting even greater pressure on global oil supplies. Crude oil prices then fell to a 2019 low of $50.60 a barrel in June, fearing that the ongoing U.S.-China trade war could hurt global economic growth and energy demand. The International Energy Agency (IEA) said global crude oil consumption grew by only 520,000 bpd from January to May 2019, half the previous year`s rate and the slowest for the period since 2008. Crude oil prices then soared to more than $60 a barrel in September 2019 due to heightened geopolitical tensions after Houthi rebels launched drone strikes on the world`s largest oil processing facility in Saudi Arabia, temporarily eliminating more than 5 million barrels of Saudi oil production. In the wake of the attack, OPEC crude oil production fell to its lowest level in 9 years of 28.59 million barrels per day in September. However, Saudi crude oil production quickly recovered and prices fell back to $50 a barrel. The dollar index also rebounded to a 21/2-year high in October 2019, which was negative for crude oil prices. Oil prices were also undercut by the surge in shale oil drilling, while U.S. crude oil production hit a record high of 12.9 million barrels per day in November. However, crude oil prices recovered above $60 a barrel after the U.S.

and China agreed on a phase one trade deal in December 2019 and military tensions between the U.S. and Iran remained high. Crude oil ended the year up +34.5% per year to $61.06 per barrel. Supply – Global crude oil supply in 2019 decreased by -0.7% per year, from 101.9 million bpd at the end of 2018 to 101.2 million bpd in December 2019. U.S. crude oil production increased +11.3% year-on-year to 12.238 million barrels per day in 2019. Alaskan oil production fell -2.7 percent annually to 485,893 barrels per day in 2019, well below the 1988 peak of 2.017 million barrels per day. Application – United States.

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