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For firm needs 1,000,000 barrels of WTI crude oil 6 months from today. You enter into a forward contract to receive WTI crude oil 6
For firm needs 1,000,000 barrels of WTI crude oil 6 months from today. You enter into a forward contract to receive WTI crude oil 6 months from today. The current price of a barrel of WTI is $41 the cost of storage for 6 months is $4.5 and the risk free rate of return is 2% for 6 months. The cost of needs to be paid today. What will the maximum contracted price today be for the payment to be made 6 months from now for 1,000,000 barrel delivery? You will pay the counterparty the contracted price 6 months from now. Assume zero transaction cost.
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