INFORMATION AND NORMAL BACKWARDATION AS DETERMINANTS OF TRADING PERFORMANCE - EVIDENCE FROM THE NORTH-SEA-OIL FORWARD MARKET

This paper utilises transaction-specific data on forward trading in th e international petroleum market to test directly predictions from the theory of normal backwardation against information-based predictions of trader performance. With the ability to identify buyers and sellers , we find that no traders make significant profits on interday measure s. Within the day, however, traders likely to have superior informatio n make significant profits. The results are not supportive of normal b ackwardation, but are consistent with the time pattern of information dissemination in this market - deals made during the day are widely re ported only at day's end.