Oil futures and strategic stocks at sea

Peter Møllgaard, Louis Phlips

Research output: Chapter in Book/Report/Conference proceedingChapterProfessional


A theoretical model explaining the determination of prices in the markets for north sea crude oil is set up. Three markets are analysed in a three-stage game in which market concentration increases by each stage: in the first stage, the international petroleum exchange is modeled as a thick futures market. This market is also used to hedge against the uncertain outcome of the 15-day forward market, modeled in the second stage. There, a small club of traders enter futures contracts knowing that this will affect the storage decision and thereby the spot price profile. The third stage models the spot market as a two-period duopoly with inventories. The strategic effect of, and interaction between, inventories and futures positions is investigated.keywordsfuture marketfuture pricespot pricespot prexstrategic effectthese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
Original languageEnglish
Title of host publicationAggregation, consumption and trade
EditorsL. Phlips, L.D. Taylor
Place of PublicationDordrecht
PublisherKluwer Academic Publishers
Publication statusPublished - 1992
Externally publishedYes

Cite this