How is XTI/UK Oil priced?

A
Written by Afterprime
Updated 1 year ago

Our oil CFDs are continuous pricing, i.e. non-expiring products that aim to deliver a fair value estimation of the spot oil price, based on a weighted average (according to time of expiry) of the front month and back month futures contracts.

Calculation

(price of contract 'a' X days remaining in the contract) + (price of contract 'b' X days remaining in the contract) / total days.

Liquidity providers also consider variables like liquidity and volatility of underlying markets and adjust prices accordingly.

Benefits of pricing

  • No need to roll futures contracts. The liquidity provider gradually transitions open positions to the next available contract as the front month approaches expiry.
  • No price spikes that require adjustments due to front month contract expiry.
  • Exposure to the underlying spot price movements of oil indices.
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