[rowante]

link

Interesting piece! $this->bbcode_second_pass_quote('', 'M')ost oil changes hands via contracts - term bulk supply deals between producers and oil companies, suppliers, refiners, all combinations and permutations in between. Contracts differ, but payment is now invariably tied to the daily marketplace; while terms are agreed at time of contract, it's by linkage to a fluctuating price marker, usually a crude benchmark spot price. Thus, all global oil exchange, the vast bulk of which is predictable in volume and rhythm, is exposed to short-term marketprice fluctuation. The oil may flow and flow, boy, but the price jigs about like a drunk at a hoedown; if you have the shootin' irons to fire bullets at its feet, then you have a powerful economic lever at your disposal. This is why this invasion and occupation is 'all about oil'.

Spot trading is the daily buying and selling of individual amounts of oil, and is what determines the marketplace price of oil. Theoretically, spot trading smooths out short-term imbalances in the underlying (real) oil market supply-and-demand equation; companies with a short-term excess of regional supply (relative to their own output market demand) sell it to those who have a short-term shortfall. Check out a website like http://www.platts.com to see the oil cargoes being traded daily.

[Tanada]

Excellent find, though a bit dated now the ins and outs are clearly explained and I do not beleive any real substantive changes in how contracts work have occured.

[Newsseeker]

Although I personally believe oil is headed up I have a lot of respect for the traders that put their balls on the chopping block everyday. Not a business I would do well in.