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Information and Normal Backwardation as Determinants of Trading Performance: Evidence from the North Sea Oil Forward Market


  • Phillips, Gordon M
  • Weiner, Robert J


This paper utilizes transaction-specific data on forward trading in the 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, the authors find that no traders make significant profits on interday measures. Within the day, however, traders likely to have superior information make significant profits. The results are not supportive of normal backwardation but are consistent with the time pattern of information dissemination in this market--deals made during the day are widely reported only at day's end. Copyright 1994 by Royal Economic Society.

Suggested Citation

  • Phillips, Gordon M & Weiner, Robert J, 1994. "Information and Normal Backwardation as Determinants of Trading Performance: Evidence from the North Sea Oil Forward Market," Economic Journal, Royal Economic Society, vol. 104(422), pages 76-95, January.
  • Handle: RePEc:ecj:econjl:v:104:y:1994:i:422:p:76-95

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    References listed on IDEAS

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    7. Tamim Bayoumi and Barry Eichengreen., 1994. "The Stability of the Gold Standard and the Evolution of the International Monetary System," Center for International and Development Economics Research (CIDER) Working Papers C94-040, University of California at Berkeley.
    8. Svensson, Lars E. O., 1994. "Fixed exchange rates as a means to price stability: What have we learned?," European Economic Review, Elsevier, vol. 38(3-4), pages 447-468, April.
    9. Tamim Bayoumi and Barry Eichengreen., 1993. "One Money or Many? On Analyzing the Prospects for Monetary Unification in Various Parts of the World," Center for International and Development Economics Research (CIDER) Working Papers C93-030, University of California at Berkeley.
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    12. Barry Eichengreen and Beth Simmons., 1993. "International Economics and Domestic Politics: Notes on the 1920s," Center for International and Development Economics Research (CIDER) Working Papers C93-029, University of California at Berkeley.
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    Cited by:

    1. Carl R. Zulauf & Scott H. Irwin, 1998. "Market Efficiency and Marketing to Enhance Income of Crop Producers," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(2), pages 308-331.
    2. Robert Weiner, 2006. "Do Birds of a Feather Flock Together? Speculator Herding in the World Oil Market," Discussion Papers dp-06-31, Resources For the Future.
    3. Olivier Rousse & Benoît Sévi, 2016. "Informed Trading in Oil-Futures Market," Working Papers hal-01410093, HAL.
    4. Tanga McDaniel & Neuhoff, K., 2002. "Use of Long-term Auctions for Network Investment," Cambridge Working Papers in Economics 0213, Faculty of Economics, University of Cambridge.
    5. Weiner, Robert J., 2002. "Sheep in wolves' clothing? Speculators and price volatility in petroleum futures," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(2), pages 391-400.
    6. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.

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