Brent crude oil has a contract of 12 months a year, which corresponds to the delivery of Brent crude oil once a month in a year, and the rolling cycle is connected with the main contract prices forward, which is a continuous contract.
A continuous contract is not continuous, but a continuous contract composed of monthly contracts according to certain rules in the actual transaction process, that is, an automatic extension contract. In fact, when it comes to delivery, it means selling the main crude oil last month and buying the main crude oil contract next month with the same money.
Brent crude oil, Brent oil in English, is produced in Brent area of North Atlantic. Futures trading on the London Intercontinental Exchange and the New York Mercantile Exchange is the benchmark of market oil price.
The price difference between West Texas Light Crude Oil (WTI) in the US market and Brent crude oil in the North Sea is still very large.
On April 20, 2020, the price of London Brent crude oil futures for June delivery fell by 2.565438 USD +0 to close at 25.57 USD per barrel, a decrease of 8.94%.
In order to improve the effectiveness, liquidity and cost control of the spread trading between Brent crude oil and WTI crude oil, NYMEX set up a public quotation for Brent crude oil futures trading in Dublin trading hall, and traded on NYMEX ACCESS electronic system platform in the rest of the time. The public bidding time is from 10 to 7: 30 pm Dublin time, and the electronic trading time of NYMEX access system is from 8: 00 pm15 to 9:30 am Dublin time.
While improving the practicability of Brent crude oil futures contracts, the Exchange has launched trading platforms of automatic quotation, price report and price difference between Brent crude oil and WTI crude oil, respectively clearing Brent crude oil and light low-sulfur crude oil of NYMEX, which is an important development of the market, because arbitrage transactions in two different markets can be completed through this platform, and it will gradually become a liquid market with transparent price, competitive trading and simple operation.
The exchange believes that arbitrage trading is a kind of transaction, which allows operators to make full use of margin and effectively reduce transaction costs. When long positions offset short positions, the exchange thinks that arbitrage reduces market risk, especially the arbitrage of Brent crude oil futures and WTI crude oil, because these two futures contracts have good correlation, and the exchange provides 95% margin credit for one-to-one Brent /WTI arbitrage trading. The exchange also provided a cost control scheme for Brent crude oil futures contracts, which reduced a lot of operating expenses for market participants.