RE:Futures Delivery?The crude paper market is 30 times as big as the physical oil market, so you could say that there is a 1 in 30 chance that that trade is physical.
The big players like the oil companies, and global trading houses like Trafigura, Vortexa, and a ton of smaller billion dollar firms ARE the oil and commodities markets. They move the market and make billions. Resistance is futile.
Physical companies that are the real buyers and sellers like refineries, or oil producers play an extremely small disproportionate part in their own market.
That said, when the paper market diverges significantly from fundamentals, chances are it will undergo a spectacular reversal as we have seen by the 60 to 90 move as a result of the Saudi cuts. Without as much crude sloshing around, and tighter supply, paper traders found themselves on the wrong side of the trade, and covered, hence here we are bumping up to $93 WTI. Short interest remains very low now.
It is at this price range that China is drawing from their reserves. They are already getting as much as they can from Russia and Iran, and must source the rest by paying world prices from SA, UAE, and others. As a result, further upside to oil from this level may be limited.
Keep your eyes on diesel and heating oil. Global refinineries are not making as much distallate. Saudi cuts have removed heavier distillate rich grades from the market and the west's refining feedstocks are becoming lighter. US, Norwegian, Nigerian, and other light sweet grades yield more gasoline, less diesel.
liljohnnyjoke wrote: if someone this morning bought 1000 units (1 unit = 1000bbls) of WTI $93 expOct23 does that mean they have to be ready with storage facilities to accept delivery of 1,000,000 bbls of oil in 12 days? and have a cheque for $93M ready?
or I am guessing that the hedge fund speculators that continuously drive the price up never take delivery, have a way out of the deal just before delivery?
I doubt China or India is buying oil at these prices, more likely $20-30BBl cheaper from the countries the US and the west have sanctions against.