2015•World Scientific handbook in financial economic seriesRequires access

Energy Futures Markets

Betty J. Simkins, Yuecheng Jia

Abstract

This chapter presents an overview of energy futures markets. A brief description of the history and emergence of energy futures markets is provided along with the current status of energy futures markets on global exchanges. The two leading energy exchanges in the world are the NYMEX (owned by CME Group) and ICE Futures Europe (a subsidiary of ICE). This chapter also discusses characteristics of successful and unsuccessful energy futures contracts, the types of energy futures and options, along with hedging examples, and price and return behavior in energy futures markets (i.e., backwardation, contango, mean reversion, and seasonality).

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Key concepts: Futures contract, Normal backwardation, Financial economics, Forward market, Spread trade, Energy (signal processing), Economics, Business