Full Answer
What are crude oil futures contracts?
Crude oil futures contracts allow crude to be bought and sold for delivery at specific dates in the future, allowing market participants to lock in a price today for the future delivery of a barrel of oil. One of the roles of futures markets is price discovery, or price determination in a marketplace of buyers and sellers.
Why did the Brent futures contract change expiration dates?
The changing of the expiration date of the Brent futures contract is intended to better align the timing of when BFOE cargoes are bought, sold, and loaded onto tankers. The difference between Brent and WTI prices, the Brent-WTI spread, is an indicator of global oil flows and market dynamics.
How do futures trading platforms show expiration dates?
In addition, some trading platforms also show when a futures contract expires. Most futures contracts are not held until expiry, so there is no exchange of barrels of oil or corn. Instead, traders make money off the price changes in the futures contract when they trade.
What are the expiry dates of futures contracts?
Futures contracts are typically divided into several (usually four or more) expiry dates throughout the year. Each of the futures contracts is active (can be traded) for a specific amount of time. The contract then expires and cannot be traded anymore. The date upon which a futures contract expires is known as its expiration date.
