The only arb that exists in oil belongs to the Saudis I suggest you study more about the storage of oil, specifically the convenience yield. The storage capacity of oil impacts the price of oil itself.
It’s just a measurement like mentioned before. If you take delivery, your providing the tankers. This is dumby version. @bone would probably know better. CME would be kushings Oklahoma I believe, this stuff is all tied to pipelines. You don’t just go with a truck and pick up barrels. Second off I’d assume theirs some administrative costs to taking delivery.
Unbelievable Oil near $13.00 ENERGY Oil futures contract expiring Tuesday dives 20% as pandemic ravages demand, June contract falls 8% PUBLISHED SUN, APR 19 202010:07 PM EDTUPDATED MOMENTS AGO
If you buying oil you should have a container (barrel, cistern, etc.). If you do not have it you will buy it, rent it, borrow it. Nothing is for free. Buy Starbacks coffe and exchange it for barrel of oil lol
When airplanes, and ships, and cars start to move relatively soon oil price will come up. Oil bottom price is around $10. Today is $13. Good point to start closely watching it. I am wondering if airlines and cruise lines are buying cheap one. UPS, Fedex do.
airline buying oil? Those who attempt to buy cheap oil at this time will probably be fired. WHY? airlines are struggling. revenue is virtually zero. liquid cash is shrinking. when liquid cash reaches zero, company will close down. airlines are begging govt and banks for loan just to float.
Saudi Arabia recently bought 8% CCL stocks share, company may have money to buy a cheap oil. One of the factor to compete, they will survive and this is good opportunity. UPS is always buying futures, they have their own oil refineries.
This price (as a measure of oil cheapness) is misleading, most of the drop is happening on this current futures which expires tomorrow. New futures trade 22+ usd so technically the current/next spread is just skyrocketing. Safe to say there are/were huge longs with the need to get out or rollover so the market simply gives them that undesired exit price. So today you say that oil is 13 but tomorrow you'll be saying that oil is 22
Have you seen this happen this drastically before ? And is it always the front month dropping more than back month or is this very unique because its storage problem ?