February Crude Oil Trading

HB, The Chinese strategic reserve is only partially completed and is sea fed not pipeline fed. Demand is not "bulging" and supply is not static. Demand growth in 2005 was barely over 1% and thiat included oil to the US SPR which is essentially full barring a few releases post hurricane. The "ordering" of oil has nothing to do with price. The physical movemnt of long haul barrels is invariably priced on a discharge basis. Therefore chances are that the oil that will be supplied to the Chinese SPR at some point will be priced on a delivered basis not b/l basis, thus will price around discharge, not loading. Now of course the Chinese can move that price basis around using the dated swaps market but thats a whole different ball game.

edit: to add more info.