t isted below are examples of different trades for oil. For each example, explain what all the trading 5. risks involved would be with the specified trade (i.e. flat price risk, location basis risk, ris roduct/quality basis risk, and/or calendar basis risk). Also. give an example of a way to structure each trade to lower some of these risks i.e. set up a better hedge trade. (10 points) You are currently an oil producer in the Bakken oil area of North Dakota. You are really good at extracting oil but maybe not so good at finance. You would like to hedge the price of your oil production for delivery in May 2017. You choose to hedge your position with a futures contract based on Brent oil due in July 2017. a. b. You own a refinery outside of Philadelphia on the U.S. eastern coast. You are importing oil worried about the price of oil for delivery from Saudi Arabia to use in your refinery. You are to your refinery in December 2016. You choose traded on the NYMEX based on West Texas Intermediate (WTI) due in November 2016 to hedge your risk with a futures contract The price of oil has risen about 50% since February 2016. Identify and explain at least 3 different reasons for the increase in prices. (10 points) 4