Quote:
Originally Posted by jimmycooper
Commodity futures are a zero sum game and derivatives never dictate the price of the underlying. In this case, the underlying is oil. Sure, institutions who hold a ton of futures contracts can somewhat manipulate the daily fluctuations of the contracts, but they can't dictate the cost of the underlying.
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What? The future contract determines the final delivered price.
As for the underlying, OPEC sets the daily output to control supply.
So one or two companies can control a majority of the futures contracts and one organization controls the supply of the underlying asset. How on Earth can that be considered a free market?
Free markets work and I'll defend them. But the oil market is no longer a free market. It will settle down though when these firms move on to something else.