Oil futures are contracts that obligate the buyer to purchase a certain amount of oil at a set price on a future date. Futures contracts for oil and other commodities are traded on exchanges, with buyers and sellers represented by brokers.
Several benefits come with buying oil futures in Canada. First, it can allow businesses to hedge against price risk. If the price of oil rises, a company that has bought futures contracts can still buy oil at the price agreed upon in the contract. Second, futures contracts offer businesses the opportunity to speculate on the price of oil. If a company believes the price of oil will rise, it can buy futures contracts in the hopes of profiting from the price increase.