Crude oil futures on the New York Mercantile Exchange (NYMEX) are the world’s most actively traded futures contract on a physical commodity. Because of its excellent liquidity and price transparency, the contract is used as a principal international pricing benchmark. The NYMEX also offers trading in heating oil futures and gasoline futures.
Crude oil futures provide individual investors with an easy and convenient way to participate in one of the world’s most important commodity markets. In addition, a broad cross-section of companies in the energy industry-from those involved in exploration and production to refiners-can use crude oil futures contracts to hedge their price risk. Light, sweet crude is preferred by refiners because of its low sulfur content and relatively high yields of gasoline, diesel fuel, heating oil, and jet fuel. Even companies that are substantial consumers of energy products can use crude oil futures to protect against adverse price fluctuations.