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I'm wrong.  

It's pretty odd for mogas to be drawing this time of year.  But that will get a lot of folks bidding up the entire complex betting that spring will be red hot.

If too many people try to buy say April/May timeframe futures, the only sellers left will be market makers who will hedge by buying the front months.  It's not like there is any real shortage of mogas in Feb (the liquid contract now).  It's just the only place to get enough liquidity to hedge against the outers.

Also, the price spread from now to April is almost 15 cts/gallon.  Some of that is quality differences but the rest implies plenty of supply now, with a lot of speculation that April/May will be very tight.  Traders will be working to fill tanks now and hedge to sell in May.  Refiners, especially export refiners in Europe, will make summer mogas in winter if a trader offers enough of a premium price.

I was too often on the bearish side.  Character flaw.

by HiD on Thu Dec 29th, 2005 at 04:30:19 PM EST
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