On January 15, the refiner X estimates it will need to purchase 10,000 barrels of crude oil

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On January 15, the refiner X estimates it will need to purchase 10,000 barrels of crude oil on May 20.

X decides to hedge price risk using a June NYMEX futures contracts. On January 15, the June futures price is USD 70.00/bbl.

On May 20, the crude spot price is USD 73.10/bbl and the futures price is USD 71.5/bbl. On that day X can buy the required crude oil and closes out the futures contract. In this scenario, what is the effective price paid per barrel?

a. USD 61.50

b. USD 73.10

c. USD 71.60

d. USD 70.00

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Financial Modelling In Commodity Markets

ISBN: 9780367442866

1st Edition

Authors: Viviana Fanelli

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Question Posted: Jun 27, 2024 02:10 AM

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On January 15, the refiner X estimates it will need to purchase 10,000 barrels of crude oil

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Financial Modelling In Commodity Markets

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