Analyzing Trading Costs in the Crude Oil Futures Market: Focus on Explicit Costs and Global Influences

Abstract

Since the introduction of crude oil futures on the Shanghai International Energy Exchange (INE) on March 26, 2018, the influence on the international oil futures market has been increasingly notable. As essential tools for risk management and income stabilization for futures companies, the trading costs of crude oil futures are of considerable importance. Given that the INE-listed crude oil futures are relatively new, having only been established two years ago, there is a scarcity of literature and research on trading costs. Due to the limitations in available data and information, this paper concentrates on explicit trading costs, mainly margin requirements and transaction fees. This study examines the margin amounts and transaction fees since the start of crude oil futures trading in Shanghai, using data from the official INE website. It analyzes their relationship with international political and economic contexts and projects future trends. Furthermore, this paper provides a comparative analysis by introducing the fluctuations in margin amounts and transaction fees in the New York Mercantile Exchange Futures (NYMEX) market.