refined petroleum products | commodities
The commodities are not always produced close to where there is demand but physical traders act as distributors, supplying clients and moving products around the world and most of the world’s oil is produced in the Middle East, whilst most of the demand is in Asia – as this map shows.
The balance between supply and demand in energy and commodity products can be affected by many factors. In the longer term, demand trends are driven by economic conditions, technological advances or changes in government policy.
In the short term, weather or political unrest can affect the balance between demand and supply, and leave commodities producers, processors or distributors with too much or not enough product.
In addition to long term supply arrangements with clients – ensuring industrial clients have a steady supply of product they need to continue with the smooth day-to-day running of their operations – physical commodity trading firms seek to identify and address short term market imbalances