Price discovery is one of the important economic functions of Commodity futures market as it provides competitive future price from which spot market can be derived. This study analyses whether crude oil futures market serves a price discovery mechanism for spot market prices and vice versa. The analysis includes use of econometric tools like Augmented Dickey Fuller (ADF) test and Phillips-Perron (PP) test to check stationary of data, Co- integration test to examine the long run relationship between futures and spot prices of crude oil by using Eviews software. The daily data 1st January 2024 to 31st December 2024 has been taken for the study for analysis. Our findings suggest that crude oil futures price movement can be used as price discovery vehicle for spot market transactions.
International Journal of Research in Finance and Management
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