DougM

Oil Futures: Money for the Taking?

In thinking about the producer's situation a bit more, it occurs to me that in trading off some lower current production for higher future prices, there's a cash flow issue. Selling (shorting) a futures contract might not generate a near-term cash flow for the producer; in fact, they might have to post some margin against the position to carry it to expiration. Worse still, the contract is denominated in dollars, the value of which are hard to predict the farther into the future you look.