Not exact matches
The benchmark West Texas Intermediate (WTI) crude
oil contract increased trading volume by 10 percent last
month.
The roll yield is the profit traders can earn when they roll their investment in crude
oil futures, which expire every
month, into
contracts that expire at a later date.
For example, you could purchase a futures
contract to buy
oil at $ 95 per barrel with a delivery date three
months from now.
This may be a simplistic and thoroughly «unsophisticated» view of markets, but why don't we limit the number (thus volume) of
contracts for
oil to the actual demand figure for that
month?
The market is still in a state of contango, in which front
month contracts are cheaper than
oil futures further out.
Investors may be so concerned about higher prices in the future that they're willing to pay $ 102 per barrel now for a
contract that promises to deliver
oil one
month from today.
If you invest in a fund that always buys one -
month oil futures
contracts, for instance, and that fund has to pay $ 2 more than the spot price for them, the fund will essentially lose $ 2 per barrel each
month when they roll their futures
contracts.
Join Spark Naturals
Oil of the
Month Club with no
contracts + skip a
month any time!
Contango: If the current price of a crude
oil contract is $ 50 per barrel, but the price for delivery in six
months is $ 60, that market would be in contango.
OILW tracks NYMEX WTI
oil contracts with an average maturity of approximately two
months.
All of the PowerShares DB Crude
Oil ETNs are based on a total return version of the Deutsche Bank Liquid Commodity Index — Oil, which is designed to reflect the performance of certain crude oil futures contracts plus the returns from investing in 3 month United States Treaury Bil
Oil ETNs are based on a total return version of the Deutsche Bank Liquid Commodity Index —
Oil, which is designed to reflect the performance of certain crude oil futures contracts plus the returns from investing in 3 month United States Treaury Bil
Oil, which is designed to reflect the performance of certain crude
oil futures contracts plus the returns from investing in 3 month United States Treaury Bil
oil futures
contracts plus the returns from investing in 3
month United States Treaury Bills.
The underlying asset in this case is the crude
oil futures
contract for the current front -
month.
Trading in the current delivery
month shall cease on the business day immediately preceding to the last day of trading in the current delivery
month of the NYMEX Light Sweet Crude
Oil futures
contract.
The Floating Price for each
contract month will be equal to the Light Sweet Crude
Oil Futures
contract final settlement price for the corresponding
contract month on the last trading day for the E-mini Crude
Oil Futures
contract month.
What happens is that
oil futures
contracts in contango are more expensive in future
months meaning the USO needs to pay more to roll its
contracts forward.
This strategy also results in unanticipated, or «windfall» profits: If the
contract is purchased forward twelve
months at $ 100 and the actual price is $ 150, the refiner will take delivery of one barrel of
oil at $ 100 and the other at a spot price of $ 150, or $ 125 averaged for two barrels: a gain of $ 25 per barrel relative to spot prices.
Due to the use of futures
contracts, many
oil ETPs make for poor long - term investments because they can expose investors to contango by using front -
month futures.
Let us say, for example, that a forward
oil contract for twelve
months in the future is selling for $ 100 today, while today's spot price is $ 75.
Options to buy
oil for $ 200 on the New York Mercantile Exchange rose 10-fold in the past two
months to 5,533
contracts, a record increase for any similar period.
An airline expecting the price of
oil to rise, buys a three -
month futures
contract for 1,000 gallons at current prices.
For instance, purchasing a 24 -
month oil futures
contract for $ 80 means you agree to purchase
oil at $ 80 a barrel 24
months from now, regardless of what the price of
oil is at that time.
Products Analyst — Gasoline & Diesel Products • Research and reconcile
oil and gas exchange
contracts at fifteen locations in the Northeast Gulf Coast region • Responsible for accounting of approximately 5 million barrels monthly per site • Track and reconcile daily and
month - end product deliveries to exchange and thru - put agreements • Utilize IBM AS400 with Microsoft Excel and in - house software • Verify and code invoices for payment, record thru - put and storage contractual obligations, and confirm posted transactions