What are crude oil futures?

Crude oil futures offer you an opportunity to profit from fluctuations in the price of a barrel of WTI or Brent crude, but they work a lot differently from just buying oil and gas company stocks. Below, you'll learn the basics of crude oil futures, and the impact that they can have on your portfolio. Image source: Getty Images.

What are WTI crude oil futures?

The benchmark futures contract for crude oil in the U.S. involves West Texas Intermediate, a particular grade of oil that has fairly low density and sulfur content that makes it relatively easy to refine. It has historically traded on the New York Mercantile Exchange, and therefore many traders refer to the contracts as NYMEX WTI crude oil futures.

What is a futures contract?

Futures contracts are derivatives that give the holder the right to buy the commodity at a specified price on the settlement date. Standard futures contracts on exchanges represent the price for 1,000 barrels of oil for delivery in a specific month, with a premium for timescales further out to cover the cost of storage and financing.

What are Nymex crude oil futures?

Crude oil futures are 1,000 barrels per contract, traded from 6:00 p.m. U.S. until 5:00 p.m. U.S. ET, all months of the year. However, you can trade more than just NYMEX crude oil futures online with Schwab. We also offer Brent crude oil futures as well as E-mini crude oil futures, which are just 50% of the size of a standard futures contract.