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CommoditiesMarkets, Performance, and Strategies$
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H. Kent Baker, Greg Filbeck, and Jeffrey H. Harris

Print publication date: 2018

Print ISBN-13: 9780190656010

Published to Oxford Scholarship Online: March 2018

DOI: 10.1093/oso/9780190656010.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 16 October 2021

Energy

Energy

Chapter:
(p.155) 9 Energy
Source:
Commodities
Author(s):

Michael A. Penick

Publisher:
Oxford University Press
DOI:10.1093/oso/9780190656010.003.0009

This chapter discusses the development and structure of energy cash and futures markets, along with current regulatory issues. It begins by discussing common features of energy markets: energy markets are characterized by inelastic short- and medium-term demand curves in which demand decreases rather slowly as prices increase. It then discusses the energy markets with actively traded benchmark futures contracts as well as the development of over-the-counter (OTC) derivatives that can be used by end users in conjunction with futures contracts to refine their hedges. The chapter concludes with a discussion of the effects of derivatives market regulation, including hedging and speculation in energy markets, position limits, and the “futurization” of OTC derivatives that were formerly structured as swaps.

Keywords:   energy market, futures, swaps, OTC derivative, regulation, hedging

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