Quote:
Originally Posted by MeatPounder
Actually that is very sound business.
Rather than simply playing the futures (as I do) and hoping like hell you never have to take or provide delivery, they are actually looking to stock up at a good price as a hedge against the inevitable rise in price again.
Not much difference in actuality as a consumer seeing soup on sale for 4 cans for a buck and loading their pantries.
It isn't hoarding, as that would necessitate a high demand with them hoarding their supply to drive up (manipulate) prices.
With all the storage at full capacity due to the lower demand it makes sense for them to find some short term storage, and hedging that the probable inevitable upswing in value of the oil they can buy at todays prices will far outweigh the price of the short term storage...a pretty good hedge IMHO
Again not much different then what I did about 4 yrs ago. A national rug manufacturer was going out of business and they had mixed pallates of their rugs (2x4 up to 12x15) on bulk auction for 500 bucks a pallette (275 a pallette for bulk of 8 or more)
I went out and rented dry storage at a locale warehouse for 100 bucks a month and bought 20 pallettes with another 10% off for just 5k....broke them down, sorted them, and fed them for two years to swaps and consignments...after paying 2200 storage, about 4k in side labor over that time, I realized about 42k
I had a great price if I could store it, knowing the resale would be astronomical down the road....so I created a hedge by obtaining storage for the bulk...same thing with what they are doing really
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How do you think prices got to where they were in July $147 per barrel?
It was a speculative bubble that popped.. sound investment?
Yes, at the expense of everybody else..