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The shape of things to come: crude oil futures, the curve and contango

Gerrit Venter, senior research manager at Wood Mackenzie, plots how the shape of the forward curve for crude oil has changed over the last 15 years, notable moments in oil price history with the 2008 economic crash and the future role the oil futures market has in mitigating price risk


Launched in the 1980s during the rise of commercial North Sea crude oil production, the Brent crude oil futures contract is the global benchmark for pricing crude oil. Priced in US dollars for standardised 1,000-barrel units of specified quality characteristics, the contract allows buyers and sellers to lock in a price for crude oil up to 96 months (M1 to M96) in the future.
Another major oil price quote, West Texas Intermediate (WTI), is a light sweet crude benchmark used to price the vast majority of oil in the US. In contrast to Brent, the price settlement point for WTI is deep inland at Cushing, Oklahoma. These two prices are hence subject to somew...

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