Question: You are a trader purchasing a cargo of 300,000 barrels Oseberg crude oil FOB Sture terminal. The cargo is due to load 10-12 November and

You are a trader purchasing a cargo of 300,000 barrels Oseberg crude oil FOB Sture terminal. The cargo is due to load 10-12 November and you have agreed pricing against Brent (DTD) over the week 8-12 November at a premium of 50 cents/barrel over Brent (DTD).

i. How would you hedge the price using Brent futures? Describe the hedging plan (position, contract maturity, initiation of hedge, quantity, unwind of hedge)

ii. How could you further improve your management of price risk using Contracts for Difference (CFDs)?

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