Everyone was correct in their own way. It's true that the entire open interest in the expiring month could roll. Ton's do. Look at spread volumes on expiration. Big. However Santelli's point is more on target. It matters little who wants to take delivery. Chances are it is a commercial spreader who'll just re-deliver next month. However if there was a glut of oil sitting around uncommitted in Cushing or wherever then producers would be selling the shit out of the front trying to make delivery. That selling pressure would evidence itself in the spread between the expiring contract and the second option month. Since the spread stays steady it doesn't appear speculative forces are distorting spot. On the other hand I could argue-and we've seen squeezes in Chicago Wheat back in 2006 and in Mnpl this year-that if cash supplies are truly diminished it's almost impossible for anybody to make delivery and short covering of historic proportion takes place. Oil doesn't trade like anyone at all is squeezed. Did we see a $13 up day? Heck grains have 10% days all the time. There's been a zillion reasons why oil has rallied and I'd put NYMEX speculation and Bush as the 2 biggest non-sequiter urban myths in the whole affair.
1) The open is determined by the existing and new orders that come into the market. 2) The closing price is usually the midpoint of the closing range. 3) On Last Trading Day, the closing price should converge to the cash market or underlying index. 4)
1) You're wrong! Just kidding. You seem to be assuming that specs only trade on the long-side of the market. 2) The commodity exchanges emphasize that they are risk transfer mechanisms, not delivery/merchandising mechanisms. 3) I'm done.
yes, the price of oil is the price of oil. Talk to any trader for an energy company. Don't let retarded media outlets fool you. Morons, such as some of the dummies on this board, are allowed to "speculate" on a decline in prices. They would, of course, be wrong. But no conspiracy is stopping them. And yeah, I'm biased- I've been long oil on every dip since 2005. I will continue to be long on every big dip until a viable alternative to oil comes online. I'm making money, my engineer friends are making money, my big oil trader friends are making money, and my geologist friends are making money.
my broker wants everybody out 3 days before FND.. failure to do so and you get an e-mail with a trade confirm along with some unpleasantries