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Playinforkeeps, If you short Nymex WTI and buy Brent you’re really just playing a spread and your losses are limited because of the correlation factor. Theoretically, and it has happened, the spread between WTI and Brent has gapped, but there is always reversion to the mean. If WTI rises...

mtzianos. There is no doubt you see what others are seeing and trading. You might consider buying a spread option(s) on the Brent/WTI spread, if you believe the spread will revert to the mean. Look at the valuations on tanker rates, imports, tariffs and you’ll begin to understand what the...

cakulev, There are a couple of costs one would/will incur when storing physical crude. 1) Purchasing the crude, 2) Transportation through the pipeline(s) to your storage facilities, 3) Local, state and federal tariffs, 4) Storage leasing (you can use the lease as a tax deduction and...

mtzianos, The people building the reserves are not “traditional” energy firms – mostly hedge funds and larger institutions (JP Morgan being one). Obviously there are still some regional independent firms building reserves, but the majority is buy/sell-side. WTI-Nymex and Brent narrowed...

mtzianos, To touch on your topic, I see two reasons for the discrepancies between the cash market and the derivatives market, 1) The “terror” premium, which has been pointed out already. 2) The pipelines and storage facilities are full because the “smart” money has been storing raw...

aPismoClam, Take a look at Orc Software's Orc Futures.

traderjb, With regard to weather derivatives, a trader with a position in natural gas and/or home heating oil can hedge warmer weather by taking a position in specific geographic areas, for example Boston, New York. One could also use weather derivatives for sports events, golf courses and...

Nononsense, You are better off having separate contracts for each area – I’ll refer to natural gas as an example. If the northeast is in a cold spell, I want the pricing for that area, not a composition contract with embedded west-coast contracts. I’d also want the difference for the...

There is a big disparity between hedging crude oil (WTI), hedging using the crack spread or hedging using jet fuel. It also depends what market (local) you are using to hedge your jet fuel for hedging. I could hedge NWE jet fuel at 619.5 for delivery, or I could purchase (hedge) using offshore...

neilcharlton, You're right, you'll need a good broker, but there are ways of getting access to exchanges without having access to the direct markets. I’m not a client of IB, but I believe IB can route orders to various futures exchanges (internationally). Market access is only part of the...

fortunatti, Don't really write here often, but... Check out coffee in the US and middle-east. You'll notice a disconnect there too.