What Are Oil Futures And How Do They Work(1)

Oil futures, and the futures market in general, can be difficult concepts to understand for the non investor.

A future is a contract to buy or sell a specified amount of a commodity or similar product at a predefined price.

This sale is set to take place at a specified future date.

In the case of an oil future, this arrangement effectively sets the price at which the oil will be bought or sold on the future expiration date.

It is a way for investors to guess at the future prices of commodities, in the hope of making a profit.

It is also a way for businesses and consumers to purchase bulk commodities at a fixed price for planning purposes.



By BIG Mike