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Here are how futures work and four popular strategies for trading futures. ... You could go long oil futures using the crude oil futures contract (code: CL) on the New York Mercantile Exchange ...
Energy portal; Crack spread is a term used on the oil industry and futures trading for the differential between the price of crude oil and petroleum products extracted from it. . The spread approximates the profit margin that an oil refinery can expect to make by "cracking" the long-chain hydrocarbons of crude oil into useful shorter-chain petroleum produc
Investors bet on the future of oil prices through a financial instrument, oil futures in which they agree on a contract basis, to buy or sell oil at a set date in the future. [2] Crude oil is stored in salt mines, tanks and oil tankers. [3] Investors can choose to take profits or losses prior to when the oil delivery date arrives or they can ...
An energy derivative is a derivative contract based on (derived from) an underlying energy asset, such as natural gas, crude oil, or electricity. [1] Energy derivatives are exotic derivatives and include exchange-traded contracts such as futures and options, and over-the-counter (i.e., privately negotiated) derivatives such as forwards, swaps and options.
The cost of fuel hedging depends on the predicted future price of fuel. Airlines may place hedges either based on future prices of jet fuel or on future prices of crude oil. [1] Because crude oil is the source of jet fuel, the prices of crude oil and jet fuel are normally correlated. However, other factors, such as difficulties regarding ...
For many years, West Texas Intermediate (WTI) crude oil, a light, sweet crude oil, was the world's most-traded commodity. WTI is a grade used as a benchmark in oil pricing. It is the underlying commodity of Chicago Mercantile Exchange's oil futures contracts. WTI is often referenced in news reports on oil prices, alongside Brent Crude. WTI is ...
In finance, an Intermarket Spread is collateral sale of a futures contract on one exchange and the simultaneous purchase of another futures contract on another exchange within any given month. As with any other spread trade , an intermarket spread attempts to profit from the widening or narrowing of the gap between the two contract prices.
The contango exhibited in crude oil in 2009 explained the discrepancy between the headline spot price increase (bottoming at $35 and topping $80 in the year) and the various tradeable instruments for crude oil (such as rolled contracts or longer-dated futures contracts) showing a much lower price increase. [14]