Key insights
- The post discusses concerns about potential market manipulation in oil futures, specifically regarding the rollover process and its effectiveness in combating price spikes. It questions the economic incentives for refineries to sell futures at a loss and highlights the disconnect between futures prices and the physical oil market. Rising fuel prices and protests in Ireland are mentioned, reflecting broader inflationary pressures. The overall tone suggests skepticism about the stability of current oil prices.
I posted this on r/oil but wasn't allowed to crosspost. I'd like to hear thoughts on it, though.
I have never traded futures, so correct me if I'm wrong please. WTI settlement is 21/04 (21 april), Brent 30/04.
I have read the market manipulators will rollover the futures to combat the price spike.
But won't that require an actual future trade to happen? You have to sell the future to someone, and that someone will end up with a futures expiring and oil not being delivered. So how can that combat a price spike? By money printers paying less, and just eating the cost to fake stability?
But then who is issuing the futures or whatever the term - if refineries are actively losing money selling at lower prices than what they have to pay for physical oil, why would they sell futures for their products at a loss? Can't they price their futures higher?
And if their products suddenly spike in price, why wouldn't the resources follow suit?
On a side note, there have been protests in Ireland because fuel is spiking significantly.