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The people who take delivery hate that. They want someone else to pay for the oil that isn't in their possession yet. There is a lot of money worth of oil sitti
by bluGill 17d ago
The people who take delivery hate that. They want someone else to pay for the oil that isn't in their possession yet. There is a lot of money worth of oil sitting in transport and the people who trade oil are the only ones who want that much money sitting around. (often people play the same market, but they like the separation anyway)
- grebc 17d agoYou speak to refiners do you?
- bluGill 17d agoMany different people in several unrelated industries. They all don't like money tied up in product. They are happy to take the typical loss of selling the contract to deliver later because they want the cash to pay bills and otherwise invest now. This is often called diversification in finance. When you have a lot of money tied into one thing it is good to sell some now for that reason even though everybody knows you won't deliver for months.
- grebc 17d agoDiversification is different to derivatives, and also cashflow. I’ve known plenty of farmers & co-ops. Big, medium, small, family. None used derivatives, at least not after trying them. A lot tried but never worked out like the finance people sold it to them. It’s always finance people selling them, talking about the need. It’s great there’s a market for it. You don’t need finance people mucking things up when actual delivery is the problem.