Hi,
Why there is Rs. 20 difference between Natural Gas current month and next month futures contract? Ideally the difference should be just 1 Rs as the cost of carry (interest rate)
Hello,
Numerous factors impact future pricing beyond just the interest rate. Among them are:
- The price is determined post introducing the contract into the secondary market, based on demand and supply.
- Natural gas inventory data.
- Natural gas production.
- Geo-political news, etc.
Due to these and numerous other factors, future contract prices could either be in Contango or backwardation.
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