04-13-2024, 06:04 PM
(04-13-2024, 04:45 PM)GMDino Wrote: and that the price of both is mostly based on speculators and not entirely on the whims of the current POTUS.
No, it's supply & demand in almost it's purest form. For starters, oil producers don't generally hedge in the futures market. There's virtually no storage, which means whatever is produced that day is priced determined according to good old supply & demand.
The futures market CAN result in demand for delivery of the commodity, but that's rare. Generally futures contracts are settled with cash, so it's doesn't have nearly the impact on the market spot price that you've been led to believe. Also, "speculators" need someone to trade with. That is sometimes companies looking to hedge, such as airlines, and thus speculators are adding a valuable service to the market. Or it is another speculator taking the OPPOSITE bet on the futures price, which is a zero sum game.
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