So you finally recognize that there is a limited amount of futures contracts... and if you pay more for them than everyone else, you get them all.
And anyone else that needs to have a guaranteed supply of future oil... now has to either buy it from you, or pay more than you for the oil on the exchange.
And oil speculators know how much Exxon is willing to pay? How much Exxon has to spend? That's funny.
Of course the speculators know what price Exxon(or oil company) is willing to pay. It's the lowest price possible to get the goods. And as long as the speculator is there, buying up the goods while disregarding current prices, because they expect future prices to be higher, then Exxon must pay whatever the price is to get the contract. And no one sells to the lowest bidder.
Don't buy the contract when the speculator tries to sell at the last minute, you'll see a huge drop in the oil market. LOL!
And why would a speculator sell at a price point less than what they paid? If you think that 'having to take delivery' is a problem for speculators... you'll need to think again. If it was a problem, we wouldn't see hedge funds making long-term investments into oil futures.
Yes, that's right, LONG TERM investments.
No, there are an infinite number of possible contracts. You can create them out of thin air. At a moments notice.
And anyone else that needs to have a guaranteed supply of future oil... now has to either buy it from you, or pay more than you for the oil on the exchange.
Since the spec is not going to take delivery and you think a refinery won't buy contracts at the last minute, the spec is going to lose his shorts when he has to sell to another spec before settlement date.
Of course the speculators know what price Exxon(or oil company) is willing to pay.
You're funny.
It's the lowest price possible to get the goods.
Not the $20 in your example?
And why would a speculator sell at a price point less than what they paid?
Because the 1000 barrels for each contract won't fit in his basement.
If you think that 'having to take delivery' is a problem for speculators... you'll need to think again.
You don't know much about commodity markets.
If it was a problem, we wouldn't see hedge funds making long-term investments into oil futures.
What makes you think hedge funds take delivery of oil?