Understanding Contango as counter programming Peak OIL in the current market. EL Mat & others, have provided 4 posts to help understand and in some cases rewrite history to suit thier past contributory content.Its clear that the mouthpiece for Peak Oil who were active over the last several years, achieved their goals, when oil hit the 145.00 per barrel mark. That record price was achieved by the paper players speculating on the potential for ever increasing shortages and the worlds unending demand for scarce supply. Those with the capacity are now profiting from thier inherent ability to manage the physical while the paper players bust.
As the pipeline of paper players grew, the pros, represented by those who actually handle the commodity began setting their trap. We wont know for a while how many paper players busted, but you can see from Contango that the Pros in the oil patch, understood the rhetoric behind the Peak oil mouthpieces, representing the interests of state producers like iran, venezuella and Russia, who are dependent on revenue at much higher prices. These governments as oil producers will now have to deal with the backlash of the peak oil contrivance. The paper players lacked the capacity to Take Delivery, to manage time, and the mechanisms of the actual commodity.
Today the Pros are taking current supply and holding it to deliver future demand, meaning the current production is ahead in time, meaning there will be shocks distributed throughout the producer patch as the supply demand imbalance grows.
There are so many lessons in this story about the relationships of real things separate from the rhetoric contrived to purpose outcomes for any given market. Today, the spread players who are experts in marshalling the physical have reasserted their control and will demonstrate how the money will be made in the foreseeable future.
Its no different than the auto makers who are now faced with 6 months of on lot inventory, and all the continuing costs of sustaining themselves, in an enviroment where the flow through of their distribution channels were normalized.
1. Message 25251597
2. Message 25250368
3. Message 25251604
4. Oil inventories in Cushing, Oklahoma, the delivery point for West Texas Intermediate, have increased 58 percent in the past three months to 22.9m barrels and traders say more is on the way.
Oil stockpiles at other key locations - the Caribbean, Rotterdam in the Netherlands, Ashkelon in Israel and Singapore - are also rising, analysts say.
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