Structural Positions in Crude Oil Futures Contracts
23 Pages Posted: 29 Oct 2015
Date Written: June 12, 2015
Should an investor enter into long-term positions in oil futures contracts? In answering this question, this paper will cover the following three considerations: (1) the case for structural positions in crude oil futures contracts; (2) useful indicators for avoiding crash risk; and (3) financial asset diversification for downside hedging of oil price risk. The paper will conclude by noting the conditions under which one might consider including oil futures contracts in an investment portfolio.
Keywords: crude oil futures, returns, backwardation, contango, spare capacity
JEL Classification: G1, G11
Suggested Citation: Suggested Citation