Tokenized oil and energy on Solana

Oil futures funds don't track the spot oil price

Most oil funds hold futures contracts, not barrels. As each contract nears expiry, the fund sells it and buys a later one. When later contracts cost more than near ones, a market state called contango, every roll loses a little value, and over months the fund can fall behind crude even if the oil price ends flat.

When later contracts are cheaper, called backwardation, the roll works in the fund's favor. Over days, an oil futures fund follows crude fairly closely. Over months, the roll can make a large difference.

Natural gas is more extreme

Natural gas prices are seasonal and can spike or collapse with the weather, storage levels, and export demand. Futures-based natural gas funds face larger roll costs than oil funds in many periods, so they can lose value steadily over long holding periods even when gas prices recover.

Energy company funds

Energy-sector funds hold shares in oil and gas producers, refiners, pipeline operators, and service companies. They move with energy prices but also with company results, debt levels, and the stock market, and many of their holdings pay dividends. For token holders, distributions are usually folded into the token's scaling factor rather than paid in cash.