Trading in Oil Futures and Options, thoroughly revised and updated, provides practical advice on when to make the decision to use futures; choosing a broker; and the mechanics of futures trading. This new edition has been extended to include all oil market trading instruments, and also gas and electricity derivatives. Updates the only comprehensive guide to oil futures and options Presents an international outlook on the topic Features a chapter on technical analysis and an appendix on the costs of futures trading

Trading in oil futures and options is an introduction to price risk management in the worldwide oil industry. With numerous practical examples, it requires no prior knowledge and should be read by everyone involved in the industry. Although aimed primarily at those new to risk management it will also provide a useful theoretical background to more experienced managers and it will show those in other markets how the oil industry uses futures and other derivatives. This book concentrates on all the risk management tools available to everyone from crude oil producer to refined product consumer and explains the theory of futures, exchange options and over the counter trading.

In 2020, the global lockdowns caused by the COVID-19, or coronavirus, pandemic had resulted in a sharp drop in demand for crude oil. This impact was so severe that on April 8, 2020, a proposal to update the Chicago Mercantile Exchange Holdings Inc. (CME) trading rule to permit negative prices was applied to CME's WTI Oil futures contracts; this led to a novel phenomenon in which the closing clearing price of WTI Oil May future was $-37.63/barrel based on fewer than 400 contracts' trading volume in the last three minutes, reflecting less than 0.2% of the total trading contracts volume on April 20, 2020. This occurrence of negative closing clearing price for CME's WTI Oil futures trading, cannot be explained simply by just the principle of supply and demand; instead, it highlights vulnerabilities caused by CME's allowance of negative price trading (based on its trading platform), a decision which brings potential and fundamental challenges to the global financial system.This event challenges not just our basic concepts of 'value' and trading 'price' of commodities and goods that underline our understanding of the framework for the invisible hand and general equilibrium theory in economics established by a few generations of scholars since Adam Smith in 1776 for market economies, but also have wider implications on the fundamentals that underpin our ideas of value and labor in the organization, activity, and behavior of civilizations and individual liberties.The scope of this book is limited to covering the impact of the negative oil futures derivatives' trading between April 20 and 21, 2020. This book focuses on exploring the issues, challenges, and possible impacts on global financial markets due to the negative clearing prices of WTI Oil futures contracts and related problems from different perspectives. Topics covered include the responsibilities and liabilities of the CME; critique to the fundamental theory of economics and the modern understanding of value and labor; and challenges to the global financial systems and businesses and introduction to new methods of application.