Howdy there, nube.
Bishop,
wrong again. You didn’t get the point. What the article is saying is that the futures price determines the price in the physical, more private market. Because the futures market is small, it can be manipulated. The oil producers don’t care about making the money in the small (futures) market. They might as well lose money in futures market. They make their real money in the physical market. It’s like this...the futures market is a 9 billion dollar market. The physical market is more than 100 times that size. If you are an oil producer....why not screw around with the small, 9 billion dollar market in an attempt to influence prices in the BIGGER market? A little money wasted in the small market (not selling off ones positions - perhaps taking delivery of the oil thereby keeping the contracts off the market) means high prices in the other. Its leverage with a kick ass mechanical advantage ratio.
And those sellers of oil you mention?? Who might they be? Other oil producers?? Why on earth would they want to short the oil?? They are also making money by the new high prices. it is not necessarily in their interest to short the oil.
I understand the Ford stock analogy. That makes perfect sense. But the point here is that the oil producers don’t care about making their cash in the futures market - they care about making their money in a DIFFERENT market - the physical oil market. They screw with the small market to set up better prices in the bigger market. The small market is cheap to screw around with.
The Ford stock traders ARE concerned with making money IN the Ford stock trading market. The Oil contract traders ARE NOT concerned with making money in the Oil Contract trading market.
It does stink that this has become politicized (not accusing you, but previous posts).