Futures

Futures are standardised contracts traded on regulated exchanges that obligate the buyer or seller to transact an underlying asset at a predetermined price on a future date. In energy markets, futures exist for crude oil, refined products, natural gas, power, and emissions. They play a central role in price discovery, hedging, and risk transfer. Futures contracts are margined and marked-to-market daily, allowing participants to manage exposure efficiently but requiring careful liquidity management. Producers and consumers use futures to hedge price risk, while traders and financial institutions use them to speculate or arbitrage. Because futures prices are transparent and widely quoted, they often serve as benchmarks for physical transactions and OTC derivatives. Movements in futures markets influence investment decisions, storage economics, and global trade flows. As such, futures are a cornerstone of modern energy markets.