Please don't tell me that you think Vitol is plotting the 200 day moving avg of front month crude to generate their billions in profits. LOL. I love ET. Better then the Oscars.
No, I am not and neither has that ever been contested. In fact I supported that fact when I said that the forward curve is arbitrage free which implicitly accurately accounts for transportation and storage cost of crude spot and forward.
That is bollocks. The forward curve is priced based on no arbitrage principles. Simple as that. Every quant finance student learns that in his/her first few lectures and anyone at a trading desk who does not know about that will have a very short lived career in this space.
I worked for more than a decade pricing forwards and using forwards to price way more complex derivatives. Have you?
you should go back to basic econ 101. The more prevalent substitute products become the less demand there will be for the product in question and hence the more the price will drop for the product in question. There is no magic to it. The crux lies in the timing and future policy decisions not in crude supplies or even the fact that substitute products WILL become much more supplied and perused.
And nobody contested that the trading houses at times make big profits. But at other times as you should be well aware they almost all went bankrupt. They were under so much pressure that one of the main trading houses engaged in tax and accounting fraud and almost went bankrupt. So much to insider information those houses possess, NONE.
He started about physical producers initially, and their pnl over time has shown that they have done horribly bad at times. Take a look at Gencore PLC. Does that look to you like a house that possess superior knowledge? A company that he claims possesses knowledge other players in the market don't? Stock price tanked 87% within the course of 4-5 years. That is the exact same argument hedge funds peddle to their poorly informed investors, that they posses superior knowledge and hence can time the market. The big trading houses CANNOT time the market because they do NOT possess insider information that would enable them to do so.
I tell you what they do. They talk out of the same arse than stock, fixed income, econ, and other commodity analysts. They know jack sxxx about future price moves. They offer their best guess which most always is blatantly wrong. Why do you think Buffet placed a comfortable bet that indexes and particularly his long term holdings outperform hedge funds? Because most players in this industry are a middle man who add little to know value, in fact most of those guys are perfect at value destruction. Mate, I have worked in this industry at the front lines for way more than a decade and I think I know a thing here or there how the game is played.
You would invest your time much more valuably going back to the textbooks and getting basic knowledge straight before you argue with someone who has been working in this very industry for way long enough to run circles around you.
Did I even remotely hinted at that? You again make up bs after you ran out of arguments a long time ago. Listen, nobody disputed that those privately held trading houses produce healthy profits. But they in no way produce superior trading results because they all suffered badly when oil prices tanked or iron ore demand plummeted. None had anticipated that, none heavily shorted the market and made a killing. Insider knowledge? Superior skills? Please. Get real.