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Crude Oil Hedger

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Crude Oil Hedger

A hedger in the crude oil market is an individual who uses the futures market to offset price risk when intending to sell or buy the actual crude oil. Hedging is possible because the crude oil cash prices and crude oil futures prices tend to move in the same direction. However, the difference between the cash price and the futures price may narrow or widen. The change in the difference between the cash price and the futures price is called basis risk. Because of the changing basis no hedge can be perfect.

A Guide To Energy Hedging

Click on the link above to download a very informative .pdf brochure entitled "A Guide to Energy Hedging.” It was published by the New York Mercantile exchange. This is a must read guide for any novice or advanced trader considering a hedge in the crude oil market using exchange traded crude oil futures and options.

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

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