Publications: Notes at the Margin

Arbitrage: Who Needs Government Data Anyway? (October 14, 2013)


Energy markets have evolved into highly efficient instruments dominated primarily by firms that use them to satisfy commercial needs. The best of these have a wide variety of information sources to help manage their interests. Traders have learned that prices contain all information regarding markets. This is a hard lesson for those who have been involved in energy or other commodity markets for decades. Information on physical activities is no longer required for markets to function. The "Young Turks" of the energy world currently focus on US Gulf Coast/Rotterdam product arbitrage relationships to determine what they will bid for WTI and Gulf Coast crudes. This report discusses the factors behind their thinking. 


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