Definition

Noun: A petroleum future is a standardized, exchange-traded contract to buy or sell a specific quantity of petroleum (such as crude oil) at a predetermined price on a specified future date. It is a type of financial derivative used for hedging against price risk or for speculative investment.

Usage

This term is used primarily in the contexts of finance, commodities trading, and energy markets. It refers to the contract itself, not the physical oil until delivery.

Examples

• The company purchased petroleum futures to lock in a stable fuel cost for the next quarter.
• Trading volume for petroleum futures increased due to geopolitical tensions in the oil-producing region.
• Analysts are studying the price trends of petroleum futures to predict the direction of the energy market.

Advanced Usage

• "to hedge with petroleum futures": To use these contracts to protect against potential adverse price movements in the physical oil market.
  • Airlines often hedge with petroleum futures to manage their exposure to volatile jet fuel prices.
• "the futures curve for petroleum": Refers to the structure of prices for petroleum futures contracts across different delivery months.
  • An upward-sloping futures curve for petroleum, called contango, indicates the market expects higher prices in the future.

Variants and Related Words

• Crude oil future: A more specific term for a futures contract based on crude oil, a primary type of petroleum.
• Commodity future: The broader category of futures contracts that includes petroleum, as well as metals, grains, etc.
• Futures contract: The general financial agreement of which a petroleum future is a specific example.

Synonyms

• Oil future
• Crude future (when specifying crude oil)
• Energy future (broader category including natural gas)

Related Terms (Not Phrasal Verbs)

• Spot price: The current market price for immediate delivery of petroleum, in contrast to the future price.
• Expiration date: The specified future date when the contract settles.
• Settlement: The process by which a futures contract is concluded, either by physical delivery of the oil or a cash payment.

Noun

1. petroleum bought or sold at an agreed price for delivery at a specified future date