Unlike over-the-counter contracts, futures contracts are standard- ized and can neither be changed nor adapted by market participants. There are two major futures exchanges—the New York Mercantile Exchange (Nymex) and the InterContinental Exchange (ICE) in London—with two major crude-oil futures contracts, ICE Brent and Nymex light, sweet crude (called Nymex WTI). While the former is cash settled at the expiration, the latter is physically deliverable. Due to high liquidity and the large number of participants, futures markets are considered price setters, while over-the-counter and spot markets are seen as price takers.
Public exchanges are the most active and liquid oil markets, with trading volumes of more than 500 million B/D. (Compare this with the actual oil-production level of about 84 million B/D). Due to lower market barriers, public exchanges are attractive for a large number of participants. These exchanges are an ideal market for financial institutions such as banks and hedge funds, which can profit from price volatility (speculative trading) while avoiding physical delivery.
Oil trading remains a turbulent segment, with few novelties emerging on the horizon. Recently, an important new exchange appeared—the Dubai Mercantile Exchange, inaugurating the Omani futures contract. At the same time, ICE launched the new Middle Eastern Sour Crude Oil futures contract. They are both competing for the status of the new benchmark in the Middle East. At the same time, several benchmarks are struggling with different prob- lems—mostly inadequate production volumes, illiquid markets, and unstable quality, which resulted in a number of improvements to the trading mechanism.
Production and ReservesExploration
and production (E&P) companies focus on finding hydrocarbon
reservoirs, drilling oil and gas wells and producing and selling these
materials to be later refined into products such as gasoline. This
activity is usually referred to as
upstream oil and gas activity. Today, there are hundreds of public E&P companies listed on U.S. stock exchanges. Virtually all
cash flow and
income statement
line items of E&P companies are directly attached to oil and gas
production; therefore, investors should develop an understanding of
basic production terminology when assessing E&P stocks.
Exploration
and production companies measure oil production in terms of barrels. A
barrel, usually abbreviated as "bbl", is 42 U.S. gallons. Companies
often describe production in terms of
bbl per day
or bbl per quarter. A common methodology in the oil patch is to use a
prefix of "m" to indicate 1,000 and a prefix of "mm" to indicate 1
million. Therefore, one thousand barrels is commonly denoted as "mbbl"
and one million barrels is denoted as "mmbbl". For example, when an
E&P company reports production of 7 mbbl per day, it is referring to
7,000 barrels of oil per day.
Read more: http://www.investopedia.com/articles/07/oil_gas.asp#ixzz2DoAaN2k2
Production and ReservesExploration
and production (E&P) companies focus on finding hydrocarbon
reservoirs, drilling oil and gas wells and producing and selling these
materials to be later refined into products such as gasoline. This
activity is usually referred to as
upstream oil and gas activity. Today, there are hundreds of public E&P companies listed on U.S. stock exchanges. Virtually all
cash flow and
income statement
line items of E&P companies are directly attached to oil and gas
production; therefore, investors should develop an understanding of
basic production terminology when assessing E&P stocks.
Exploration
and production companies measure oil production in terms of barrels. A
barrel, usually abbreviated as "bbl", is 42 U.S. gallons. Companies
often describe production in terms of
bbl per day
or bbl per quarter. A common methodology in the oil patch is to use a
prefix of "m" to indicate 1,000 and a prefix of "mm" to indicate 1
million. Therefore, one thousand barrels is commonly denoted as "mbbl"
and one million barrels is denoted as "mmbbl". For example, when an
E&P company reports production of 7 mbbl per day, it is referring to
7,000 barrels of oil per day.
Read more: http://www.investopedia.com/articles/07/oil_gas.asp#ixzz2DoAaN2k2
Production and ReservesExploration
and production (E&P) companies focus on finding hydrocarbon
reservoirs, drilling oil and gas wells and producing and selling these
materials to be later refined into products such as gasoline. This
activity is usually referred to as
upstream oil and gas activity. Today, there are hundreds of public E&P companies listed on U.S. stock exchanges. Virtually all
cash flow and
income statement
line items of E&P companies are directly attached to oil and gas
production; therefore, investors should develop an understanding of
basic production terminology when assessing E&P stocks.
Exploration
and production companies measure oil production in terms of barrels. A
barrel, usually abbreviated as "bbl", is 42 U.S. gallons. Companies
often describe production in terms of
bbl per day
or bbl per quarter. A common methodology in the oil patch is to use a
prefix of "m" to indicate 1,000 and a prefix of "mm" to indicate 1
million. Therefore, one thousand barrels is commonly denoted as "mbbl"
and one million barrels is denoted as "mmbbl". For example, when an
E&P company reports production of 7 mbbl per day, it is referring to
7,000 barrels of oil per day.
Read more: http://www.investopedia.com/articles/07/oil_gas.asp#ixzz2DoAaN2k2
No comments:
Post a Comment