> I don't understand your confusion. If the futures price rises, of course
> the spot price is going to rise. It means there's someone willing to pay
> higher prices, at least for now, for the underlying commodity. Arbitrage
> will force the prices to move in tandem.
Unrelated to this exchange... Maybe I'm wrong, but Shane seems to be thinking that because, in a market ex post, the quantity supplied (immediate or future delivery, it doesn't matter) must equal the quantity demanded (which, in the particular case of derivatives, translates into a zero-sum game) then somehow the price that equates supply and demand has to remain fixed. No, it doesn't have to. Things happen that shift demand and supply -- *expectations* is one of those. After a shift, quantities supplied and demanded will get equalized, but the price (and the quantity) may wind up higher or lower compared to prior to the shift. This, of course, doesn't preclude that, later on, people may realize that the expectations underlying their supply or demand shifts were all garbage, when the price of all of a sudden changes direction. That said, as Jordan argued, derivatives are zero-sum games only in monetary terms, not in wellbeing terms; I mean, if we believe that risk considerations enter into their sense of wellbeing.