Oil futures contracts are agreements to purchase or promote a certain quantity of oil at a set worth on a future date. They’re traded on exchanges, and the worth of a futures contract is set by the spot worth of oil, in addition to by elements comparable to provide and demand, storage prices, and rates of interest.
Futures contracts are utilized by a wide range of market individuals, together with producers, customers, and speculators. Producers use futures contracts to lock in a worth for his or her oil, whereas customers use them to hedge towards the danger of rising oil costs. Speculators use futures contracts to guess on the longer term worth of oil.