Matthew Moore at The Telegraph really needs to go and have a little chat with someone over on the City Desk. This is sad rubbish.
The basic allegation is that speculators are holding oil in tankers off the coast thus pushing up petrol prices. Holding drivers to ransom as it were.
This slightly misses a number of points. Future prices for oil have been higher than spot recently: higher enough that buying spot and storing (yes, even with the costs of storage) makes a profit.
But no one is doing this and then waiting for the price to rise: that\’s not how this sort of arbitrage works. They buy it spot and sell it forward on the same sday, thus locking in their profits. they\’re not waiting for anything pother than the due delivery date.
The other mistake is this:
The amount paid for petrol by British motorists is determined in large part by the supply of oil to onshore refineries in Britain.
No, it isn\’t. It\’s largely determined by the flow of refined products coming out of the refineries (plus of course the price of crude). And there\’s a shortage of refinery space. There\’s plenty of oil to go in (the spot price is low, remember? So it\’s easy to buy stuff for immediate delivery) it\’s that the capaity for refining is limited.
In the end, those tankers of crude off the coast have no effect at all on the price of petrol onshore.
Must do better if you\’re going to write about futures markets, really.