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On May 15, an oil producer negotiates a contract to sell 1 million barrels of crude oil at the market price on August 15. The
On May 15, an oil producer negotiates a contract to sell 1 million barrels of crude oil at the market price on August 15. The producer shorts 1,000 futures contracts (each futures contract for oil is for 1,000 barrels) when the spot price of oil is $80 and the crude oil futures price for delivery on August 15 is $79. What is the result of his position if the spot price on August 15 is $75? $85
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