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What is the reason for importing market december

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The NYMEX WTI (cushing) crude spot month contract (CLZ) is trading at $94.00 per barrel. The cost of shipping crude from Cushing, Ok to South Chicago is $.30/bl. Forward contracts for crude delivered South Chicago for December are trading at $93.80/bl. the cost of transporting synthetic crude (tar sands) from Alberta Canada is $.50/bl. Alberta crude for Dec is trading $94.25/bl. Cost of crude storage in the Chicago area is $.50bl.month.

a. What is the reason for this importing market's December price being less than the exporting markets's Dec price?

b. What minium Chicago December price would be required for a rational trader to sell and ship crude to Chicago and from which of the two source would the crude originate?

Reference no: EM133073416

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