Brent Crude Oil (BRENT-IPE)

Brent crude is produced mainly in the North Sea region off the north of the UK in the North Atlantic, and is widely traded across futures, OTC swaps, forwards and spot markets. It sits at the heart of today's global oil pricing system and is regarded as a highly flexible tool for hedging risk and for trading. Around 70% of international crude trade prices itself, directly or indirectly, against the benchmark formed in the Brent market complex.

West Texas Intermediate (WTI-NYMEX)

Produced mainly in the United States, WTI is the most widely referenced grade of crude in North America. All crude produced in, or sold into, the United States is priced against light, sweet WTI as the benchmark. The WTI futures contract offers excellent liquidity and a high degree of price transparency, and stands as one of the three major benchmark prices in the world oil market.

Why invest in crude oil?

The lifeblood of industry: crude oil has outstanding physical and chemical properties. Beyond its role as an energy source, its industrial applications reach into every corner of the national economy. It is a vital material foundation for economic growth and industrial modernisation. A modern economy is no more separable from oil than the human body is from blood, which is why oil is known as the lifeblood of industry.

Strategic importance: after the Second World War, control over crude oil helped cement the United States' position in the global political and economic order. Today, rapid industrial development has put every nation under the twin pressures of economic growth and energy scarcity. Energy shortage has become a worldwide problem, and oil is no longer an ordinary commodity. It plays a decisive role in global politics, economic standing and the military balance.

Enormous trading volumes: the world's main oil trading markets, spanning north-west Europe, the Mediterranean, the Caribbean, Singapore and the United States, together number five major hubs. Driven by global economic growth and ever-rising energy demand, oil has long been called the king of commodities and is widely recognised as the most heavily traded commodity in the world.

Looking back, the major swings in the oil price have been dramatic in both directions, time and again creating legendary profits that draw investors in droves. For all these reasons, investing in crude oil has become one of the hottest instruments to emerge on the international scene in recent years.

About the New York Mercantile Exchange

The New York Mercantile Exchange (NYMEX) was formed in 1994 through the merger of NYMEX and COMEX, and is one of the world's largest commodity exchanges. It sits in the heart of Manhattan's financial district, next door to the New York Stock Exchange. Its trading centres on two broad product groups, energy and metals, with energy volumes far outstripping everything else. The exchange deals mainly in futures and options, and to this day futures volumes far exceed options volumes.