What are oil futures?

Futures markets are commodity markets, where investors basically agree to the purchase of a specified amount of a commodity at a specified price in the future in the future. Futures markets came at the beginning of the 18th century in Japan and at the beginning of the 19th century to Europe and America. The first futures markets arose from necessity, and sellers need to ensure large fluctuations in the price of their product by obtaining a guarantee from buyers that no matter what the market looked like in a few months, they could get the price they needed for it. Every day they represent billions of US dollars (USD) in the store and help control the price of oil at the end of the consumer. Futures oil can be a bit confusing for some people, because it seems strange that an investor would like to buy a lot of something like oil, but it's just because they don't really want the physical oil that works the oil futures market.

basically existTwo groups of people involved in oil on oil: Hedgers and speculators. Hedgers are people who really want to buy and sell oil, physical commodity. These hedgers want to move around the product, but want to minimize the risk they can encounter on the basis of market fluctuations. Speculators, on the other hand, do not want to own oil at all, but they want to take a little risks and perhaps earn quite a lot of money. So they shop for future oil contracts from Hedgers, based on what they think the price of oil will be.

Futures oils can be secured short or long secured. In the future, a speculator that buys a short collateral of oil futures is buying a contract in the future, selling a certain amount at a certain price. The speculator will benefit from the short hedge if oil prices fall. The speculator that buys a long provision of oil futures buys a contract for the purchase of a certain amount of oil at a certain price. This speculator will be profit if oil prices increase.

dispatchThe Hedgers are safe, no matter what happens on the market is the use of both the spot market and the Futures oil market. Spot Market is a cash market, based on daily oil price and takes the opposite position on the spot market from what they occupy on the futures market, ensure that no matter what direction the market is neutral.

speculators only buy oil futures - they never buy on the spot market - so they don't get their purchases to stay neutral. Instead, they bet that the market moves either up or down and benefits from this shift. If they are right, they can earn a large amount of money in a relatively short period of time, but if they incorrectly measure market movement, Can lose the same drastically.

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