Oil at sea, waiting for price increase.

[Hondo]

http://www.foxnews.com/story/0,2933,480099,00.html

[steve_spackman]

http://www.foxnews.com/story/0,2933,480099,00.html

fox news..the word sly comes to mind ;)

[Easy Drifter]

Same thing in 72. Oil is in mid thirties and dropping if anything.
Our gas prices have increased $0.16 a litre in the last week and a half.
Rip off time anyone.

[TOgoFASTER]

Unhindered free market entrepreneurship...

[Mark in Oshawa]

Supply and Demand....you don't want to play this came? Ride a bike...otherwise pay up...but if you look at what we pay for gas in North America anyhow....it is about our father's paid proportionately....or even slightly less.

[Kneeslider]

Because oil is an energy commodity which you can store, and it can also be traded as futures contracts, then it makes sense to buy the oil now, store it somewhere, and then sell out a furtures contract to make a no risk profit.

Say I can buy oil in a tanker somwhere in the world today at $35/barrel, the costs of storage and carriage for a month are $1/bl, but I can then sell out the oil for February delivery at $38.50, then I am going to execute all my trades now, and make a paper profit of $2.50 for no risk whatsoever.

When the spot price (spot is trader speak for the most immediate delivery) is much less than the futures price for any commodity, then the market is said to be in Contango, and those with storage assets are set to make a great deal of money.

In practice, the above situation may not be as lucrative as it may appear, because the price for storage of assets floats as much as the cost of the commodity itself.

The physical limit occurrs when all of the storage facilities around the world are full of cheap oil, and the fundamental costs dictate that the market for future delivery of oil is going to correct downwards.

An interesting analysis of why global markets topped out at $147/bl during the summer was due to the Olympics.

The Chinese were under international pressure to clean up the air quality around Beijing so that their country looked nice on the telly, and none of the athletes would be seen to complain to the global TV audience, so the Chinese PR machine swung into action, and all of the un eco friendly coal fired power stations within so many miles of the games were converted to run on oil. Understandably this meant a huge jump in global demand, and so the price jacked up accordingly.

[SOD]

look at the value at the oil futures conracts. hint their price is not the $30 region, think north of it.