t is now July 2016. Consider the following Futures Market for 1,000 barrels of Crude Oil:

Crude Oil Market (price per barrel, for 1,000 bbls.)
Date	Jul-16	Nov-16	Feb-16
Spot Price	35.00	35.00	39.00
December 2016 Futures Price	33.00	34.25	exp.
March 2017 Futures Price	37.00	38.00	39.75

Suppose you are the CFO of an independent oil refiner. You will need to purchase 500,000 barrels of Crude Oil in November 2015 and February 2016 on the spot market. Please devise a hedging strategy for the company, assuming you are only allowed to use front month contracts meaning that in July 2015 (now) you can only hedge with the December 2016 futures contract. When that position is closed at the price indicated, then you can use the March 2016 Futures contract.

What would the average price have been if you simply purchased the oil in the spot market?