There are three major energy exchanges. The International Petroleum Exchange of London trades an active Brent Crude Oil and a Gasoil (heating oil) contract. The Tocom (Japanese) trades active gasoline and kerosene contracts. The predominant Exchange, however, is the New York Mercantile Exchange.

When I first entered the business, a part of my training program at Merrill Lynch was a tour of the Exchange floor. The New York Exchanges are housed in the same building, and after touring the wild and woolly COMEX (where the metals are traded—now a wholly owned division of the NYMEX), we passed a pit with four or five traders, not one of which was shouting out bids or offers. (In fact, a few of them were reading the paper.) We were told this ...

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