If you want to trade the crude oil market, there are several facts you should know about this energy source. Crude oil is one of the world's most widely used energy sources. There are many exciting uses for crude oil beyond gasoline. Crude oil is formed from the fossils of animals and other organic matter from millions of years of petrification. It is a naturally occurring substance comprised of hydrocarbons and is considered a type of fossil fuel. If you are interested in discovering more about what crude oil is used for, look no further than this list of facts that every trader should know before they start to trade crude oil prices.
Crude oil is a Non-renewable Energy Source
Crude oil is considered a non-renewable energy source. This means that crude oil is not replenished at the speed at which it is used. Since it is consumed faster than it is created, there is a finite amount of crude oil available worldwide. People are using crude oil and continue taking it from reserves that are found within the earth.
Crude oil creates gasoline, distillates, kerosene, petrochemicals, and electricity.
Approximately 45% of the crude oil available is used to create gasoline. Gasoline is the most commonly used substance for automobile energy. If you plan on crude oil investing as CFDs, you should probably track the price movements of gasoline, since this is where the majority of the demand lies. For gasoline to be created from crude oil, it is refined into other products using a complex system. Petroleum products refined from crude oil include gasoline, diesel fuel, jet fuel, petrochemical feedstocks, and even asphalt. Petroleum products are mainly used for transportation in automobiles, buses, trucks, trains, and jets. Crude oil can also be used to make electricity. Most of the process involves using a turbine to generate an electromagnetic charge and then capturing the electricity from the turbine to light and heat homes worldwide.
Most of the Crude Oil Reserves are in the Middle East
Crude oil has been discovered in many places throughout the world. Most of the globe's largest crude oil reserves are in the Middle East. The Ghawar field in Saudi Arabia claims to be the world's largest oil field. About 5 million barrels of crude oil are pumped from this reserve daily. The field is more than 3300 square miles, with multiple areas producing crude oil. The Ghawar field in Saudi Arabia has about 33% of the crude oil produced by Saudi Arabia.
The United States is the World’s Largest Consumer of Crude Oil
The U.S. consumes the most crude oil of any nation. Nearly 50% of the crude oil refined worldwide comes from five countries. The total is slightly more than 97 million barrels per day. The United States consumes about 20% of the oil produced. Surprisingly, according to the Energy Information Administration, the United States is also the world's largest oil producer. While the United States consumes more than 19 million barrels of crude oil daily, its consumption aggregate has remained stable for the past 30 years.
According to the Energy Information Administration, crude oil in the United States comes from 73 countries. About 72% of the crude oil in the U.S. comes from imports and about 35% from exports. The U.S. might import crude oil and export its crude oil because refiners in the United States have a process of taking less expensive crude oil that is heaviest and using that crude oil to make products like gasoline. The United States will then export its lighter, sweeter crude oil to other countries to make a profit. Most crude oil imported into the United States comes from Canada, Mexico, and Saudi Arabia. The next most significant consumer of crude oil is China, which consumes about 16% of the world's crude oil.
Crude Oil is Priced in Dollars per Barrel
The price of crude oil is determined by many factors, including supply and demand. Crude oil is priced in dollars per barrel. The average crude oil has a gravity of about 32 degrees and weighs about 7.21 pounds per gallon. One barrel of crude oil is equivalent to 42 gallons. The conversion is vital since products in the United States are priced in dollars per gallon. You would also need to convert it into metric tons and liters. Since the United States is the largest consumer, the price of oil is quoted in U.S. dollars.
Crude Oil is Traded Physically and Financially
Crude oil is traded throughout the globe. To consume crude oil, producers will quote it as a delivered product to other traders or countries. Crude oil that is physically produced needs to meet specifications like gravity, sulfur content, and weight. Many products can be used to engage in crude oil investing. For example, contracts for differences (CFDs) and ETFs are just a few of the securities that track crude oil movements. These financial instruments generally do not require that you take delivery of crude oil.
Summary
Crude oil is traded both physically and financially around the world. Crude oil is an energy source that creates gasoline, petrochemical products, and electricity. To make gasoline, crude oil needs to be refined. The largest consumer of crude oil is the United States, which also happens to be the largest producer of crude oil. The largest individual crude oil reserve is in the Ghawar field in Saudi Arabia. Crude oil is priced in U.S. dollars per barrel. A barrel of crude oil is about 42 gallons. Oil is also quoted in liters and tons. If you want to invest in crude oil prices, several financial products such as CFDs and ETFs can be used to track crude oil movements without requiring the investor to deliver crude oil physically.