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BY:

SRINATH REDDY.P1245-10-672-2008

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India has a long history of commodity trading,extending over 125yrs; commodity includes all kind ofgoods. Future Trading is organized in such goods orcommodities as permitted by central government.

Crude oil is known as the king of all the commodities.Nowadays, oil is one of the most traded commoditiesin the world. Crude oil is important everywhere in theworld.

Any variation in the price of crude oil influences theeconomy. Just like any other product, variations in theprice of crude oil take place due to its demand andsupply.

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Commodity markets are markets where raw orprimary products are exchanged. These rawcommodities are traded on regulated commoditiesexchanges ,in which they are bought and sold in

standardized contracts. A commodity trading is a sophisticated form of

investing. It is similar to stock trading but insteadof buying and selling shares of companies, aninvestor buys and sells commodities.

Like stocks, commodities are traded on exchangeswhere buyers and sellers can work together toeither get the products they need or to make aprofit from the fluctuating prices.

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Oil is an essential commodity for allindustrialized economies of the world and thedemand for oil is soaring as industrialization ispicking up pace.

In keeping up with the demand, the price ofcrude oil has risen over 10 times in the lastdecade alone.

One can participate in this booming market bytrading in the oil commodity market orthrough exchange traded funds exclusivelydevoted to oil.

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Investing in crude oil is just like investing inthe stock commodities market but most people,especially small investors are wary of investingin oil

Crude oil investment can be a bit complicatedand proper analysis and research should bedone when evaluating investment.

At the end of the day, its the profit that matterbut to make profit, an investor must studymarket trends movement of crude oil pricesupply/demand gap

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To know the factors affecting the crude oilprices.

To know the futures trading of crude oil.

To know the trend analysis of crude oil prices.

To know the fluctuation of crude oil prices.

This study is to know the crude oil market.

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METHODOLOGYThe data is collected from secondary sources since most of thestudy is based on secondary data the necessary information hasbeen collected from reports and others, and data is tabulated,

analyzed and interpreted. Data is collected from the internet,books and newspaper.

SCOPE OF THE STUDY

The study was conducted to have insight into trading under crudeoil and process in commodity market. Scope of the study was toidentify various technical tools used in trading.

LIMITATION

Use of limited technical tools. Study is conducted to limited time period

Study is based on assumption Data is generated from secondary sources ,therefore accuracy and

authenticity of data depends upon reliability of sources.

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New York Mercantile exchange [NYMEX]

Intercontinental Exchange [ICE]

Dubai Mercantile Exchange [DME] Multi Commodity Exchange [MCX]

Tokyo commodity exchange [TOCOM]

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A financial powerhouse! Thats what Bonanza is for you!

Established in the year 1994, Bonanza developed into one ofthe largest financial services and broking house in India withina short span of time.

With diligent effort, acknowledged industry leadership andexperience, Bonanza has spread its trustworthy tentacles allover the country with pan-India presence across more than

1400 outlets spread across 460 cities. Bonanzas offers you the perfect blend of financial services right

from Equity Broking, Advisory Services that cover PortfolioManagement Services, Mutual Fund Investments, andInsurance to exceptional Depository Services.

Bonanza is affiliated with the best in the industry right from

the NSE, BSE MCX, MCX-SX to CDSL, NSDL, etc. Theseaffiliations prove our worth in the market and make Bonanza aname to reckon with.

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DEMAND

SUPPLY

RESTRICTIVE LEGISLATION

DECLINING PRODUCTION

NATURAL DISASTERS

SPECULATIVE BUYING

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a futures contract is a standardized contract between two parties

to exchange a specified asset of standardized quantity and qualityfor a price agreed today (strike price) with delivery occurring at aspecified future date, the delivery date.

The party agreeing to buy the underlying asset in the future, the"buyer" of the contract, is said to be long", and the party agreeing

to sell the asset in the future, the "seller" of the contract, is said tobe short.

While the futures contract specifies a trade taking place in thefuture, the purpose of the futures exchange institution is to act asintermediary and minimize the risk of default by either party.

Thus the exchange requires both parties to put up an initialamount of cash, the margin. Additionally, since the futures pricewill generally change daily, the difference in the prior agreed-upon price and the daily futures price is settled daily also.

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Crude Oil Contract SpecificationsTicker symbol Open Outcry: CL (NYMEX)Contract Size 1,000 barrels (42,000 gallons)Deliverable Grades Specific domestic crudes with 0.42% sulfur by weight or less, not less than

37 degrees API gravity or more than 42 degrees API gravity. The following

domestic crude streams are deliverable: West Texas Intermediate, LowSweet Mix, New Mexican Sweet, North Texas Sweet, Oklahoma Sweet andSouth Texas Sweet.

Specific foreign crudes of not less than 34 degrees API nor more than 42degrees API. The following foreign streams are deliverable: U.K. Brent, forwhich the seller shall receive a 30 cent per barrel discount below the finalsettlement price; Norwegian Oseberg Blend is delivered at a 55 centsperbarrel discount; Nigerian Bonny Light, Qua Iboe, and Colombian Cusianaare delivered at 15 cent premiums.

Contract Months All monthsTrading Hours NYMEX Open Outcry: Monday-Friday 9am-2: 30pm EST

eCBOT Electronic: Sunday-Friday 6pm-5: 15pm CSTLast Trading Day Trading terminates at the close of business on the third business day prior

to the 25th calendar day of the month preceding the delivery month. If the25th calendar day of the month is a non-business day, trading shall ceaseon the third business day prior to the business day preceding the 25thcalendar day.

Last Delivery Day All deliveries are ratable over the course of the month and must be initiatedon or after the first calendar day and completed by the last calendar day ofthe delivery month.

Price Quote Dollars and cents per barrel.Size NYMEX: 1 cent per barrel ($10.00 per contract)

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The technical tools that are used under futurestrading of crude oil are:

1.Candlesticks signals2.Support and resistance levels3.Head and shoulders4.Zig-zag pattern

5.Moving average convergence divergence(MACD)6.Relative strength index (RSI)

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