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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Karen Blankenship who wrote (25673)	7/14/1998 11:50:00 AM
From: marc chatman	Respond to of 95453

<<Given that, just as a hypothetical, what if, instead of there being 23-24 days usage stored, there were only 15 days usage stored, and there was still nowhere to put the oil...would oil price be where it is now?>> Well, say you are an oil trader, and you hold a contract to take delivery of August crude. And then, the delivery date for that contract is a couple of days away, but all the storage is filled (or it is so close to filled that storage commands a huge price). What do you do? More likely than not, you sell the contract. And all the other traders are doing the same thing. Everyone wants to sell, so prices come down. Whether the number of days usage stocked away is 24 or 15 shouldn't matter. By the way, I can't find the post either, but I'm pretty sure days in storage are up (about a day) over last year, but way down from previous years. Now, I suppose there are some buyers with access to storage -- some big refiners, perhaps? What do they do? Right now, they wait until the sellers flood the market, prices get cheap, and they stock up. Do I know this is the way the system works? Hell no!! I'm just guessing based on the information I've been able to piece together. Maybe someone here is more familiar with how things work and can correct me where I'm wrong. Now, I suppose there