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Re: Tankers
MasterPlan
06-11-2008, 2:06 PM | Post #2527478
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>>>Refiners have to have certainty that the crude they are
buying for tomorrow will be available - via pipelines or tankers. In
addition, the sellers must also have an ability to sell their forward
production ahead of actually producing it. These schedules plus
shipping, pipelining schedules mean that most refiners have already
committed to most of the crude they are going to buy 2 to 3 months
forward.
So you're basically saying the refiners don't play the spot market, and
they always buy futures contracts -- it's just a matter of how many
months forward. That makes sense. Though I thought if the
spot price was really low, they might want to snap up a bargain.
But I guess opportunistic buying wouldn't fit in with the strategic
planning of a behemoth like Chevron.
>>>>The only people that benefit from contango are the
middlemen (I said traders). They are not typically either crude
producer or refiner, but some companies straddle the mid space.
Okay, that answers the questions of where the traders fit in...
The refiners are at the mercy of the traders and there's never any real
negotiations between them and the producers.
>>>Ship activity could be due to a temporary rise in imports
due to domestic crude productions snafus, or crude production snafus in
Mexico or Canada (which are big exporters of crude to US) even in the
absence of any real demand increase.
That's a thought... My local refineries are directly replenished
by sea from the Mideast, but there's also a belowground pipeline
network in the area, and I have no idea of it's extent. Maybe
it's connected with Mexico or Canada, and that provides the balance of
inputs. If Mexico/Canada is down, the refineries can trade more
than usual with the Middle East.
Thanks again, Anil. I've probably messed up a bit in my
interpretations again, but I hope I'm a bit closer. Futures are a
tough nut to crack. I'll probably never really understand them
unless I start trading them.
Topics
Canada
futures
Mexico
Middle East
pipeline
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