Quote:
Originally Posted by mynameisjim
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.
|
You can buy physical oil through futures if you take delivery of the oil, but at that point, the spot price and delivery price will be equal. The spot price drives the futures price and the spot price is driven by supply and demand. The only way banks can impact the spot prices would be if they were to take physical delivery and inventory it.