CBC senior business correspondent shows lack of basic understanding of crude oil markets
Constructive dialogue is a necessary component for any discussion taking place on important issues. Be it the economy, an election, or foreign affairs: each warrants informed discussion at both the local and national level. The same can be said about Canada’s energy sector. With the oil and gas industry being such a fundamental player to the overall Canadian economy, the importance of said dialogue cannot be understated. That said, it should come as no surprise that the key to constructive dialogue taking place, is to start with a strong knowledge base.
CBC’s senior business correspondent, Amanda Lang, is one of the few people on television who’s job is to inform the general public of the economy and, as such, the oil and gas industry. There are very few people on TV who understand the oil and gas industry and the markets which drive it, and after discovering a comment from Amanda Lang on the price of a crude oil futures contract, it has become clear that she is not one of them.
Let me first start by explaining what a commodity (in this case crude oil) futures contract is: it is an agreement between two parties where one party agrees to buy a standardized amount of crude oil (1,000 barrels in this case) from another party for a specified price at a standardized date in the future.
So let’s say I sell one June 2016 crude oil futures contract at $45.00. What I am in effect doing is entering a contract whereby I will deliver 1,000 barrels of oil to the counterparty of the contract for $45 per barrel in June 2016. An important aspect of this agreement is that if, prior to June 2016, I buy one June 2016 futures contract, it will offset the contract that I had sold earlier, and my net position will return to zero (this is by far the most common scenario, very few futures contracts ever actually transition into deliveries).
learn here kids:
CBC senior business correspondent shows lack of basic understanding of crude oil markets | BOE Report
Constructive dialogue is a necessary component for any discussion taking place on important issues. Be it the economy, an election, or foreign affairs: each warrants informed discussion at both the local and national level. The same can be said about Canada’s energy sector. With the oil and gas industry being such a fundamental player to the overall Canadian economy, the importance of said dialogue cannot be understated. That said, it should come as no surprise that the key to constructive dialogue taking place, is to start with a strong knowledge base.
CBC’s senior business correspondent, Amanda Lang, is one of the few people on television who’s job is to inform the general public of the economy and, as such, the oil and gas industry. There are very few people on TV who understand the oil and gas industry and the markets which drive it, and after discovering a comment from Amanda Lang on the price of a crude oil futures contract, it has become clear that she is not one of them.
Let me first start by explaining what a commodity (in this case crude oil) futures contract is: it is an agreement between two parties where one party agrees to buy a standardized amount of crude oil (1,000 barrels in this case) from another party for a specified price at a standardized date in the future.
So let’s say I sell one June 2016 crude oil futures contract at $45.00. What I am in effect doing is entering a contract whereby I will deliver 1,000 barrels of oil to the counterparty of the contract for $45 per barrel in June 2016. An important aspect of this agreement is that if, prior to June 2016, I buy one June 2016 futures contract, it will offset the contract that I had sold earlier, and my net position will return to zero (this is by far the most common scenario, very few futures contracts ever actually transition into deliveries).
learn here kids:
CBC senior business correspondent shows lack of basic understanding of crude oil markets | BOE Report
