General Discussion

GreatGazoo

(4,793 posts)

37. Since oil is sold as futures there is more profit when buyers panic about the future

Thu Jun 4, 2026, 03:17 PM

Jun 4

It's like if someone was selling fire insurance and we are in a wicked drought. And they run around saying 'Wow our experts say this drought is going to last another year so you should buy at these high rates now before we have to raise rates even higher.' They are trying to rush more people to pay the high rate before it rains.

If the USA accepts the $1 per barrel deal that Iran wants on the Strait then oil goes back down to like $70. Exxon wants to sell as much as they can as high as they can before any bigger deal is confirmed and prices drop further. Some predict a glut about two weeks after a deal that holds.

Toward the bottom of linked:

If a peace deal is signed that appears likely to hold, then two-to-four weeks looks like a sensible starting point for clearing the Gulf backlog and restoring shipping patterns, with flows possibly ramping back towards full levels after another two-to-four weeks, according to Houston-based Vikas Dwivedi, global energy strategist at Macquarie Group.

In this base-case scenario, in which the market believes a deal is real and has staying power, the sell-off would be immediate and large, approximately US$20 in one week. This would be followed by a two-week consolidation period, and then a period in which logistical and financial issues are repriced. “After this, we expect the market to end up with far too much oil again as mitigation sources of supply continue as Hormuz flow ramps up, creating a physically driven overshoot to the downside,” underlines Dwivedi. “Finally, prices trend toward a normalisation of crude supply and demand and a return to what we believe is the fair value range of US$65 to US$70 per barrel,” he concludes.

https://www.msn.com/en-us/news/world/inside-the-iran-deal-that-may-change-nothing-but-could-smash-oil-prices-anyway/ar-AA24yGAr

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If the Strait of Hormuz doesn't open soon, as seems likely, there will be a massive economic crash [View all] LymphocyteLover Jun 4 OP

The shit is on the wing orangecrush Jun 4 #1

The storage cushion is fudgy. bucolic_frolic Jun 4 #2

President Bone Spurs had a plan to get out of Vietnam. Emile Jun 4 #3

Daddy's not buying his way out of this one. dem4decades Jun 4 #4

From another perspective cachukis Jun 4 #5

there's definitely been some adaptation... but still a lot has been kept afloat by the reserves that are likely to run LymphocyteLover Jun 4 #27

No question. One of my worries is the takeover of cachukis Jun 4 #31

Absolutely. I totally agree on all those points. The stock market is particularly a mess IMO LymphocyteLover Jun 4 #32

Have invested mostly in real estate over the last cachukis Jun 4 #34

Why would " Diesel goes first"??? Melon Jun 4 #6

800,000 to 1.2 million SamuelTheThird Jun 4 #11

It's one country. Multiply across all oil producing Melon Jun 4 #41

Yes, but the key is how long the strait stays closed and how quickly the reserves run out LymphocyteLover Jun 4 #28

Diesel is often made from mideastern crude while gasoline is made from US crude JT45242 Jun 4 #30

Not In The US, Though ProfessorGAC Jun 5 #45

Completely wrong. GreatGazoo Jun 4 #7

lol@your link SamuelTheThird Jun 4 #10

You ignored all the numbers to nitpick about semantics GreatGazoo Jun 4 #15

Are America's strategic reserves at a 40 year low right before the summer season? SamuelTheThird Jun 4 #19

Traders in Singapore, Beijing and Mumbai aren't duped by whatever Trump says GreatGazoo Jun 4 #36

This message was self-deleted by its author LymphocyteLover Jun 4 #29

Futures Are Not Delivery modrepub Jun 4 #39

"futures price contracts probably isn't a good predictor of actual future prices" -- meaning spot prices, yes GreatGazoo Jun 4 #42

Future Prices Are Not Necessarily modrepub Jun 5 #43

No. For anyone holding a March contract at $63 their price in March was $63 GreatGazoo Jun 5 #44

Appreciate your insight as I'm an admitted economic idiot. I can see where Exxon would be trying to "warn" Cheezoholic Jun 4 #21

Futures lock in a price right now GreatGazoo Jun 4 #22

Admittedly, Im no expert or even amateur...but SamuelTheThird Jun 4 #35

Since oil is sold as futures there is more profit when buyers panic about the future GreatGazoo Jun 4 #37

All hinging on a deal that isn't going to happen SamuelTheThird Jun 4 #38

Last week Exxon Mobil warned that oil inventories will fall to record low levels in coming weeks LymphocyteLover Jun 4 #33

Demand destruction WSHazel Jun 4 #8

"one of the key reasons that Trump started this conflict was to increase energy prices"-- agree LymphocyteLover Jun 4 #25

And it's all part of the plan... 2naSalit Jun 4 #9

Excellent summation. Kid Berwyn Jun 4 #12

I don't think the Strait of Hormuz never reopening is going to happen, but it will not reopen without a major shock ToxMarz Jun 4 #13

Agree. Thanks for the link. LymphocyteLover Jun 4 #24

Kick dalton99a Jun 4 #14

MAGA does the full collapse kairos12 Jun 4 #16

First the bastids want to grift off it, if they can. GreenWave Jun 4 #17

But I thouight it would be open in two weeks. AverageOldGuy Jun 4 #18

That's the point. Blue Full Moon Jun 4 #20

Unbelievably awful LymphocyteLover Jun 4 #23

It's happening now as we speak. marble falls Jun 4 #26

Remember that the UAE left OPEC a few weeks ago WSHazel Jun 4 #40