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the average crude production of a Texan oil well is 18bbl/day. If the production is sold every 56 days and the spot price is 59$/bbl,
the average crude production of a Texan oil well is 18bbl/day. If the production is sold every 56 days and the spot price is 59$/bbl, should the average producer also enter into a futures contract? The standard deviation of crude oil is about $5 for the timeframe considered. the settlment price of future contract is 59.83 $/bbl, the size of the futures contract is 1,000bbl. The probability of crude oil increased by one std is 45%. Use the average and standard deviation to support your recommendation.
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