While the market focus is usually upon macro issues associated with the demand of crude oil, the real action is all about location and logistics. It is the process of getting oil from one location to another which often is the most profitable trading and what may drive volatility dynamics.
There is a shortage of Brent oil and there is excess of WTI. Unfortunately, it is difficult to get the excess supply from one market location to another. This causes price differentials and lead to spread differences in futures contracts. It also makes shipping and pipelines very valuable. Understanding the process and information about this supply chain logistics is what trading companies pay for with their specialists.
No comments:
Post a Comment