Dynamics of Arbitrage
How much do you know about crude oil storage in the U.S. and the relationship between this storage and crude oil prices? To enforce the Law of One Price, storage should increase when spreads between crude oil contract months widen enough for arbitrage. This happens but predominantly in one U.S. crude oil storage location. To find out more about this storage location and other interesting information, take a look at this video and Kateryna Holland’s paper titled “Dynamics of Arbitrage,” co-authored with Louis Ederington, Chitru Fernando, Thomas Lee, and Scott Linn.