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From the Other Side

Publication year - 2015

Publication title -

the leading edge

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.498

H-Index - 82

eISSN - 1938-3789

pISSN - 1070-485X

DOI - 10.1190/tle34111306.1

Subject(s) - futures contract , oil storage trade , economics , commodity , hedge , newspaper , work (physics) , business , financial economics , monetary economics , commerce , oil price , market economy , advertising , engineering , mechanical engineering , ecology , biology

I alluded to the downturn in the oil industry last month and almost promised that I would follow up with additional thoughts. Every morning when I receive the newspaper (yes, I still read my news on paper), I check the price of West Texas Intermediate oil (WTI). One day, it rose to US $45.70, a staggering increase of US $0.79. That is the price of delivery to somewhere. One must recall that oil is a commodity, and the price fluctuates depending on which side of the bed the traders woke up on that morning. I have no idea how this commodity market works, although I know it is often volatile. I am sure traders have indexes to guide them, but they are out to make a buck. The ones who work for oil companies must deal with supplying crude oil to their respective refineries. I am sure they play the futures market heavily, and if they don't hedge their “bets,” bad things happen (to them).

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