The explanation of this vast subject has been cut into three e-papers. One will cover the linkage between spot and futures prices (Part 1), one will cover the effect of the forward curve on physical markets (Part 2) and the last e-paper will cover the effect of crack spreads on market players (Part 3).
Everybody who is active in the oil industry knows that financial futures markets are linked to physical oil markets and that they determine to some extent the behavior of players in that market.
But what is the logic behind these links, how do they exactly influence markets and most importantly, how can one anticipate on changes in market fundamentals?
This is the mystery that we will try to unravel in this e-paper.