Determining the price of oil


If you were curious.

Dateline 2016-01-29, FMT:

Three types of market

Since the second half of the 1970s, oil market transactions have gradually replaced the old system of “producer prices”, whereby a dominant supplier or suppliers of crude would impose a reference price on buyers.

Today there are three types of oil markets. On the physical “spot” market, delivery of oil is almost immediate following a transaction.On the physical “forward” market, the delivery occurs but not immediately.

Finally, on the “futures” market, investors buy or sell future intentions to hand over a quantity of oil. The timeline can vary from several months to years, while the seller and buyer virtually never take receipt of oil and the deal remains a “paper” transaction.

Financial journalists mainly report on the “futures” market.

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