OIL jan at 36, tomorrow will cost 42, why no spike???!

Discussion in 'Trading' started by spanish89, Dec 18, 2008.

  1. I lookd and the daily contract for oil has expired but is now up 600ticks in a huge super spike form 7.30 to now.

    While i know this is cos the feb contract is now gna be traded at that price,
    the jan contract doenst expre till tomorrow.

    So wont there be a huge huge amount of buying now in this jan contract???

    Since you can buy oil at $36 through it.

    But on the daily contract it will cost you $42!! :confused: :confused: :eek:

    So you could just go and buy 1000s barrels for 36, and then tomorrow sell them at all 42..???

    I never had any of these roll-overs or any of that sort of stuff,
    but i have an extremely nasty feeling that in some sick twisted sort of luck the jan contract could rise a few dollars too now, and i will miss it
  2. Would this be an easy sell to make 100s of ticks???

    by selling that contract that they call ''daily'', but hold it overnight, and let the 16% spike pullback??

  3. i dont get if its me whos misunderstood what could be done, or most other traders are idiots... lol

    Bascially before and still while having trading as my main career im a business man.

    So i buy and see pyshical goods and services.

    If i saw an offer on saying 'Armani jeans, buy them for £20 today only, but from tomorrow we are moving price back up to £30'...

    I would go and buy them that day for £20.
    Then would come back the next day and sell them myself at the going price that wuld be £30.

    if more people heard aboyt this offer for £20 that day, 30 next they would also all rush out and be buying loads, since they knew they could make guaranteed profit the next day.

    But so in trading, where no matter how fancily you make it look and all charts and stuff you still are just buying and selling barrels of oil.

    And so there was oil being offered for $36 today, with the price that you can sell at tomorrow being $42.

    So arent all traders just being complete thickos by not buying thousands of barrels today at £36, and then tomorrow selling all those barrels tomorrow for $42??? :confused: :confused: :eek: :eek:
  4. Doesn't work that way on roll-over.
  5. I dont trade futures so forgive me if i think im stating the obvious. Wouldnt it be the same reason you cant short gold now and buy it back at february prices? They are different contracts, right?

    Or are you talking about buying barrels of oil, taking delivery and then selling them the next day with futures contracts? If thats the case then yeah, Buy them now for 36, then sell them for 50 in june 09 and you've made 14 dollars per barrel of oil...(minus shipping, storage and all that and hope you gotta place to store it)

    Sorry if this is not what you mean. Like i said...i dont trade futures.
  6. Physical oil trading is far more complex than u can imagine. It is not as simple as buying 36 today and selling 42 tomorrow.

    for the most part, physical oil is bot and sold at an avg daily price of nymex daily settle. If i bot 10K barrels, you have to transport it somewhere, either to your market or storage, it may take days to transport the quantity across the pipeline. there are storage fee's, transport fees, grading premiums/discounts, etc etc.

    You do not literally get 10K steel drums dropped off from a truck in your backyard.

    The deeeeeeeep contango is evidence that the market is very oversupplied and storage capacity is running thin. Storage may not be full, but the people that own rights to the storage are keeping them.

    I feel after the gap that feb will likely fall, and you will likely see the feb/mar get very wide as well.
  7. I would suggest that it is the former, and NOT the latter.
    You really should have a much better understanding of what you are trading.

  8. Time to arb the physical..
    take delivery of the Jan, and deliver the Feb....
    Call Cushing...should be easy money..:D
  9. That's the problem.
    The Cushing storage facility is FULL.
    Nowhere to store January crude oil.

    Maybe you can work out a deal under the table with someone at Cushing? Either that, or lease a tanker somewhere?

  10. I'm going to Target today to buy a tanker.
    #10     Dec 19, 2008