Trading Crude Oil on MCX: Key Specs, Insights & Market Dynamics
- WTI vs. Brent Crude Oil: Key Differences
- Price Correlation and Spread
- MCX Crude Oil Contracts: Specifications
- Frequently Asked Questions
Navia Markets Ltd. offers trading in crude oil contracts on the Multi Commodity Exchange (MCX), which are based on West Texas Intermediate (WTI) crude oil. It’s important to understand the distinctions between WTI and Brent crude oil, as they often exhibit significant price differences.
💡 Quick Answer
Navia offers crude oil futures and options on the Multi Commodity Exchange (MCX), based on West Texas Intermediate (WTI) rather than Brent. WTI is lighter and sweeter than Brent, making it cheaper to refine into gasoline. MCX lists a full-size CRUDEOIL contract of 100 barrels and a smaller CRUDEOILM mini contract of 10 barrels.
WTI vs. Brent Crude Oil: Key Differences
| Feature | WTI (West Texas Intermediate) | Brent Crude |
| Origin | U.S. (Texas, Louisiana, North Dakota) | North Sea (UK, Norway) |
| API Gravity | 39.6° (lighter) | 38.0° (light) |
| Sulfur Content | 0.24% (sweeter) | 0.37% (sweet) |
| Delivery Point | Cushing, Oklahoma (landlocked) | Offshore platforms (seaborne) |
| Primary Use | U.S. gasoline production | Global diesel and gasoline production |
| Exchange | NYMEX (CME Group) | ICE Futures Europe |
| Price Influences | U.S. supply-demand, storage capacity | Global geopolitical and supply factors |
WTI is a lighter and sweeter crude oil, making it easier and cheaper to refine into gasoline and other petroleum products compared to Brent.
Price Correlation and Spread
WTI and Brent crude prices are generally correlated, but the spread between them can vary due to factors such as regional supply-demand imbalances, transportation constraints, and geopolitical events. For instance, in April 2020, WTI futures prices turned negative due to storage capacity issues at Cushing, Oklahoma, while Brent prices remained positive, highlighting the impact of regional logistics on pricing.
MCX Crude Oil Contracts: Specifications
MCX offers trading in crude oil futures and options contracts based on WTI crude. Below are the specifications:
Crude Oil and Crude Oil mini Futures Specifications
| Parameter | Crude Oil | Crude Oil Mini |
| Symbol | CRUDEOIL | CRUDEOILM |
| Lot Size | 100 barrels | 10 barrels |
| Price Quotation | Per barrel in INR | Per barrel in INR |
| Tick Size | ₹1 per barrel | ₹1 per barrel |
| P&L per Tick | ₹100 | ₹10 |
| Trading Hours | 9:00 AM – 11:30 PM / 11:55 PM (DST) | 9:00 AM – 11:30 PM / 11:55 PM (DST) |
| Contract Expiry | 19th of the contract month | 19th of the contract month |
| Settlement | Cash settled | Cash settled |
Crude Oil and Crude Oil mini Options Specifications
| Parameter | Crude Oil | Crude Oil mini |
| Symbol | CRUDEOIL | CRUDEOILM |
| Underlying | Crude Oil Futures (100 barrels) | Crude Oil Mini Futures (10 barrels) |
| Option Type | European Call & Put Options | European Call & Put Options |
| Lot Size | 100 barrels | 10 barrels |
| Strike Price Interval | ₹50 | ₹50 |
| Premium Quotation | Per barrel in INR | Per barrel in INR |
| Tick Size | ₹0.05 per barrel | ₹0.05 per barrel |
| Trading Hours | 9:00 AM – 11:30 PM / 11:55 PM (DST) | 9:00 AM – 11:30 PM / 11:55 PM (DST) |
| Contract Expiry | 17th of the contract month | 17th of the contract month |
| Settlement | All in-the-money (ITM) options on expiry devolve into futures contracts | All in-the-money (ITM) options on expiry devolve into futures contracts |
Do You Find This Interesting?
We’d Love to Hear from you-
Key Takeaways
- Navia offers MCX crude oil contracts based on West Texas Intermediate (WTI), not Brent.
- WTI is lighter and sweeter than Brent, making it easier and cheaper to refine into gasoline.
- WTI is landlocked at Cushing, Oklahoma while Brent is seaborne from the North Sea, which drives their price spread.
- MCX lists both a full-size CRUDEOIL contract and a smaller CRUDEOILM mini contract in futures and options.
- The WTI-Brent spread moves with regional supply and demand, transport constraints and geopolitical events.
Frequently Asked Questions
What is the difference between WTI and Brent crude oil?
WTI originates in the U.S. and is delivered at Cushing, Oklahoma, while Brent comes from the North Sea and is seaborne. WTI is a lighter and sweeter crude oil, making it easier and cheaper to refine into gasoline and other petroleum products compared to Brent.
Which crude oil does MCX use for its contracts?
MCX offers trading in crude oil futures and options contracts based on West Texas Intermediate (WTI) crude.
What is the lot size of the MCX crude oil contract?
The Crude Oil contract has a lot size of 100 barrels and the Crude Oil Mini contract has a lot size of 10 barrels.
Why do WTI and Brent crude prices differ?
WTI and Brent crude prices are generally correlated, but the spread between them can vary due to factors such as regional supply-demand imbalances, transportation constraints, and geopolitical events.
What happens to MCX crude oil options at expiry?
All in-the-money (ITM) options on expiry devolve into futures contracts.
DISCLAIMER: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Brokerage will not exceed the SEBI prescribed limit. Full disclaimer: https://bit.ly/naviadisclaimer.
