Better Fill up today

[frawin]

Unfortunately Crude Oil Inventories were down again in the EIA weekly Report and crude was up on the day, the front month August closed at $143.57, up $2.60 on the day, the outer monthhs traded in the $145.00 range. I have been travelling all day and
just now got my laptop on line.
Frank

[frawin]

August, front month Crude traded higher in overnite access, it is $146.30, up $1.78 and September has traded as hiigh as $146.25.
Frank

[Dee Gee]

Frank, what does the front month and outer months that you refer to mean?  Is that the first month that futures are traded?

Dee Gee

[frawin]

Dale, you can buy or sell futures contracts, for any month out  for years, right now I watch it for 8 years out. The trading for the 1st month out  is currently August, so that is the front month, the trading for August will end around the 20th of July and then September will be the front month. The front month impacts the current crude prices the most.
You can hedge almost anything , Crude Oil, Gasoline, Natural Gas, Beef, Corn, Wheat, Pork, all crude oil derivatives. The future market is agreat tool but it can also be a detriment, and there is some thought and I think evidence that it is being manipulated by traders buying long contracts to push it higher and higher. There needs to be  and I think there will be some controlls put on to limit some of the , what I call gambler trading.
Frank

[DanCookson]

Frank,

What effect is the weakness in the dollar contributing to the crude prices?  The way I am looking at it, the currency weakness has got to be fueling some of this.

Dan

[Tobina+1]

In my previous job, I traded Live Cattle futures.  "Speculators" is what we called those people who buy and sell just on the numbers games (what Frank calls "gamblers").  For example, yesterday (or day before), the Corn acres numbers were released which tells how many acres of corn are planted (and how many were ruined by the flood).  Speculators were pushing the market higher before this release, as they speculated that the flood destroyed a lot more corn and there would be a high demand for corn.  But the numbers actually told that more corn was planted this year than previously thought, so there will be a higher supply, which made the futures prices go down.
The company I worked for, we actually owned feedyards, so if the prices of the contracts were too low to sell them back (compared to the price we were buying them), then we'd actually "deliver" cattle on the contract at the end of the front month.  So, whoever had bought a contract... now owned approximately 50 head of cattle.  I don't know how much this "delivery option" is used in other markets, though.  Not very many other companies did the cattle delivery like we did.  I think they used it on corn, because our company was also a grain company, too. 
Anyway, we always got irritated with the speculators/gamblers, too.  Any little bit of news affected the markets horribly.  You can imagine what happened every time there was a suspected case of BSE somewhere in the world! 

[dnalexander]

Tobina, that is a very good example of how the futures market works. I think that is an example that everyone can understand.

David

[Tobina+1]

Thanks, David.  I fretted over that post for a bit before I submitted.  It's been almost 4 years since I've done that stuff, and I wanted to make sure my terms were correct.  I had to put orders in directly to the CME floor, and that was so nerve-racking!  You could hear everyone in the pit yelling.  Sometimes they'd fill the order while I was still on the phone (the guy would be yelling in my ear)!  I did mix up Buy and Sell... but only ONCE (and I still had a job).  We SOLD contracts when we BOUGHT cattle.  And we BOUGHT contracts when we SOLD cattle.
I remember the difference in "bullish market" and "bearish market" this way:  Bulls have horns and they hook them UP.  Bears have claws and they tear things DOWN.
The one thing I didn't get to do yet was visit the CME floor.  It would have meant more when I was working for my old company because I could have had a floor tour from our brokers, but it will still be neat just to view it from above during trading hours sometime!

[sixdogsmom]

I always thought the bull and bear markets were represented by the red line the animals body made on the profit/loss chart; the bulls back was an upward arc, and the bears' belly was a downward arc. I like the hook 'em up term though.

[dnalexander]

Just heard on the news this morning the stock market is now officially in a bear market. (20% off the market high).

David