The technical answer to you question involves the Synthetic Triangle:
There are six basic synthetic positions:
Synthetic Long Stock = Long Call + Short Put
Synthetic Short Stock = Short Call + Long Put
Synthetic Long Call = Long Stock + Long Put
Synthetic Short Call = Short Stock + Short Put
Synthetic Short Put = Short Call + Long Stock
if trafigura agrees to sell say a barrel of WTI crude oil @ $56 3 months hence. How would they hedge it?
There is no need to hedge in this case. I assume they they are guaranteed to own the oil in this scenario, and they already have a future price locked in, so there's no risk to hedge.
Now, on the other hand, if they were going to sell oil in three ...
With contango, a long-term futures contract will decline to the spot price as the time winds down. So an advantageous position would be to hold the sell-side of a long-term futures contract while also holding the physical commodity. And here storage of the physical commodity is the effective business practice.
With backwardation, a long-term futures ...