can anyone tell me how companies trade energy? is it like stock? or do they actually move the commodity when.
Monday, February 1st, 2010 at
12:47 am
Nick B asked:
an anyone tell me how companies trade energy? is it like stock? or do they actually move the commodity when they trade it? specifics please. Thanks.
an anyone tell me how companies trade energy? is it like stock? or do they actually move the commodity when they trade it? specifics please. Thanks.
Tagged with: Commodity Trade • Specifics • Trade Stock
Filed under: Commodity Trading
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When a company is trading energy, or any other commodity they typically are trading contracts to purchase the commodity at a specific date and price. For example a company may buy 10 million barrels of oil without every actually taking delivery and then sell that oil on to others at a later date. Energy is sold in the same way. Companies buy electricity for example, which obviously can’t be stored in large quantities, so they are really buying the right to receive it at some future point.