Crude oil futures are contracts between buyers and sellers. A contract is an agreement and agreement that the buyer will buy crude oil from the seller at a certain price (spot price) in the future (contract expiration date). For example, you can buy futures contracts with a delivery period of three months. After three months, regardless of the actual price of crude oil at that time, the buyer is obliged to obtain crude oil at the price of 95 dollars per barrel (or settle it in cash).
Buying crude oil futures can look at your own gains and losses. If you buy futures at a price of $95 per barrel, but the delivery price is $92, you will lose $3 per barrel, because it is basically more. Of course, if the spot price of crude oil delivery is 98 dollars, you can earn 3 dollars per barrel.
In fact, when oil prices soar and other major airlines are damaged, locking crude oil contracts at a lower price will help Southwest Airlines save millions of dollars.
Where can I find crude oil futures?
The New York Mercantile Exchange
The New York Mercantile Exchange is a commodity futures exchange operated by the Chicago Mercantile Exchange Group outside Chicago (the New York Mercantile Exchange is headquartered in new york and has offices around the world). The trading code of the New York Mercantile Exchange crude oil futures is cl, which allows the buyer to control 65,438+0,000 barrels of crude oil and use WTI benchmark. Crude oil contracts sold in the New York Mercantile Exchange can be settled in cash (transporting crude oil to downtown Cushing, Oklahoma) and cash, which usually happens.
Intercontinental exchange
Intercontinental Exchange is an exchange headquartered in Atlanta, Georgia, mainly engaged in electronic trading of futures and other commodities. The crude oil sold through ICE adopts Brent crude oil standard. The contract code is B, which controls 65,438+0,000 barrels of crude oil. Although there is EFP option, it is mainly settled in cash.
The main difference between ICE and the New York Mercantile Exchange crude oil trading lies in the different standards used. West Texas Intermediate oil from the Midwest of the United States and the Gulf Coast is lighter and sweeter than most other major standard oils. Brent crude oil is a mixture of crude oil from the North Sea and the British coast.