Mastering the Commodities Markets

Background and Context

Oil, the oil markets and the geopolitical machinations around it provide a never-ending and much-romanticised James Bond-esque view from the press that often far belies the reality of the situation.

In the simplest of terms, oil is still extracted from the ground in crude oil form and then shipped or piped to refineries where the crude oil is refined into oil products ranging from material for the petrochemical sector at the top to bitumen for roads at the bottom. From the top to bottom of this process are myriad people, all trying to make a profit. Figure 3.1 shows how crude oil prices have moved since April 2004, and highlights the growing price disconnect between two key marker crudes – WTI (West Texas Intermediate), ...