LeoGlossary: Oil

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Oil is the world's primary energy source at the moment. This makes it one of the leading commodities in both use case along with market trading. It is a standard that many macroeconomic analysis utilizes to determine how the global economy is doing.

Crude oil is naturally occurring unrefined petroleum. It is mostly composed of hydrocarbon deposits. It’s a finite resource that can be refined to produce everyday products like gasoline, diesel fuel, and petrochemicals for plastics.

Since the Industrial Revolution, oil overtook the food staples such as corn and wheat to rule the market. Crude and its derivatives are the most actively traded commodity.

There are two source of oil that markets focus upon:

  • Brent - low sulfur found in the North Sea and refined in Western Europe

  • WTI - low sulfur also pulled from the North Sea but refined in the Gulf Coast.

WTI is considered higher quality as compared to Brent due to the lower sulfur content.

Oil is mostly traded on the futures market. Many companies utilize this to hedge against price fluctuations. There are also funds that investors can buy into such as USO. It is a market that can experience a great deal of volatility due to the many factors that can affect the supply and demand of oil.


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