OIL FUTURES PRICES AND STOCK MANAGEMENT - A COINTEGRATION ANALYSIS

Futures markets are considered important to hedgers and speculators. T herefore, they are relevant to stock management. This issue is tested empirically by applying the methodology of cointegration analysis and causality testing to the monthly average of commercial (non-strategic) primary oil stocks and monthly averages of West Texas Intermediate (W TI) spot and futures prices for one month and three-months delivery, o ver the period January 1985 to June 1993. Long- and short-run relation s are presented. The results support the view of a relationship betwee n futures prices and oil stocks.