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Name Class/ Teacher May 10, 2006 Oil Markets 1. All petroleum crude (oil) purchased or sold in the world is traded in three basic ways Spot Trading, Futures Market, and Contract arrangement. Spot transactions are on-the-spot agreements to buy or sell a single shipment at an agreed price. Since suppliers and buyers use these to bridge short-term gaps between supply and demand, spot market prices are good indicators of the supply and demand situation, rising prices indicating shortage and vice versa. There are spot markets for different products namely crude oil, heating oil, gasoline and so on, and for different regions such as Rotterdam, US Gulf, Singapore etc. Futures markets cover trades that are promises to sell and buy a consignment of oil of a specified quality, delivered at a specified place at an agreed upon price up to 18 months in the future. Very little, if any, oil changes hands physically in futures markets,...

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