What happened to crude?
James L. Williams
On Monday oil prices on NYMEX spiked as high as $130.00 per barrel and at the end of the day were up $16.37 to close at $120.92. If you are a buyer of physical crude or a user of petroleum products this wasn't not as bad as it looked. It doesn't mean that gasoline and diesel prices will be up by 40¢ per gallon. If you happen to own an oil well, don't start planning what to do with the extra $16 per barrel.
As many of our readers are not futures traders we will go through the basics. The NYMEX oil futures contract is like many other business contracts. It is a contract to deliver a certain volume of oil of a specified quality at a particular place and time. We won't bore you with the quality issue except to say it is fairly high quality. The place of delivery is Cushing, Oklahoma and the quantity and timing of delivery is for a total of a 1,000 barrels of oil delivered in roughly equal volumes over the course of the contract month. There is a separate contract for each month and while the prices for the contracts often move up and down together they are seldom the same.
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James L. Williams
On Monday oil prices on NYMEX spiked as high as $130.00 per barrel and at the end of the day were up $16.37 to close at $120.92. If you are a buyer of physical crude or a user of petroleum products this wasn't not as bad as it looked. It doesn't mean that gasoline and diesel prices will be up by 40¢ per gallon. If you happen to own an oil well, don't start planning what to do with the extra $16 per barrel.
As many of our readers are not futures traders we will go through the basics. The NYMEX oil futures contract is like many other business contracts. It is a contract to deliver a certain volume of oil of a specified quality at a particular place and time. We won't bore you with the quality issue except to say it is fairly high quality. The place of delivery is Cushing, Oklahoma and the quantity and timing of delivery is for a total of a 1,000 barrels of oil delivered in roughly equal volumes over the course of the contract month. There is a separate contract for each month and while the prices for the contracts often move up and down together they are seldom the same.
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