Timeline for Why buy consumable commodities?
Current License: CC BY-SA 4.0
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| Sep 23, 2021 at 10:37 | comment | added | Criticizing Israel not allowed | @DStanley in principle that's still a useful service - if they make a profit doing that, it means they're storing the oil from times when not much oil is needed, to times when lots of oil is needed, and ya know, someone has to do that job... storing it in tankers seems inefficient though. | |
| Sep 22, 2021 at 17:56 | history | edited | D Stanley | CC BY-SA 4.0 |
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| Sep 22, 2021 at 17:56 | comment | added | D Stanley | @Grade'Eh'Bacon thanks for that great addition - one anecdote I remember from my days in the energy biz is shipping companies buying oil cheaply, selling expensive oil futures and storing the oil in tankers that would just sit in the gulf waiting for the futures to expire. | |
| Sep 22, 2021 at 17:38 | comment | added | Grade 'Eh' Bacon | Good answer - important to add, as well, that long-term storage of these commodities is prohibitively expensive to retail investors. For example, a standard oil futures contract is for 1,000 barrels of oil [each barrel being 156L, with a diameter of 23"] would require a warehouse about 65'x65'. At a current price of about $70 USD / barrel, and with warehouse lease rates in Oklahoma [near point of delivery for oil futures] appearing to cost something like $20/ month / sq ft, you would pay about $15k / year to hold oil that costs only 70k on the futures market [even excluding all admin costs]. | |
| Sep 22, 2021 at 17:26 | vote | accept | Marcus | ||
| Sep 22, 2021 at 17:19 | comment | added | Orange Coast- reinstate Monica | Why would anyone not in the industry invest in consumable commodities? They wouldn't - instead, they invest in funds that employ strategies of investing in futures and options on these commodities. | |
| Sep 22, 2021 at 16:09 | history | edited | D Stanley | CC BY-SA 4.0 |
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| Sep 22, 2021 at 16:02 | history | answered | D Stanley | CC BY-SA 4.0 |