But the Exchange doesn't set these prices either. They reflect the value some buyer or seller is putting on a futures contract at any given time during any given day. The price of oil futures reflects the give and take of trading. It reflects the price that participants in the market are willing to pay in order to hedge their positions and exposure in the underlying cash market. Some companies are protecting their prices for oil to be delivered next month.
Some companies routinely hedge as far out as seven years.
They have long-term contracts and they want to be sure they can fulfill those contracts as profitably as possible. The function of the Exchange is to provide a modern, efficient forum for trading, a set of rules under which trading is to take place, and a framework to guarantee the financial integrity of the market. We have been doing this for 126 years, and we think we're doing a good job of it because, on any given day this year, some 375,000 strategic commodity contracts changed hands at the Exchange. The other purpose of the Exchange is to operate as a place for price discovery. When you decide to sell your slightly beat-up 1994 Jeep Wagoneer, you will have a hard time finding out how much someone anywhere in the world is willing to pay you for it.