A market with that kind of diversity is often subject to intense competition which, in turn, breeds price volatility and the need for reliable risk management tools. The harbor is a major distribution center on the East Coast for domestically produced and imported supplies, and is connected to the major refining centers on the Gulf Coast, and to other important market centers, through a network of interstate petroleum pipelines. Commercial users, such as fleet operators, can also use the unleaded futures contract to hedge against price risk in meeting their fuel procurement needs, and to help stabilize procurement costs. Speculators in the futures markets fulfill several vital economic functions by facilitating the marketing of basic commodities and the trading in financial instruments. In addition to assuming risk, providing liquidity and capital, speculators help ensure the stability of the market.
Speculators trade in the futures markets to profit from price fluctuations.
The price of grain, for example, changes along with supply and demand. Plentiful supplies at harvest time usually means a lower price for grain. Higher prices may result from such things as adverse weather conditions during the growing season or an unexpected increase in export demand. Financial instruments fluctuate in price due to changes in interest rates and various economic and political factors. When speculating in the futures markets , both profits and losses are possible - just as in owning the actual, physical commodity.