Wednesday, December 23, 2009

Looking at oil markets

Here I try and use the Dual Norm insight and see if it fits my view of the oil markets.

A simple entropy analysis of oil distribution reveals quants of: The tanker ship, the oil port, the refinery, the gasoline truck, the gas stations and the auto gas tank. Thes Quants are unlikely to change, but more or less of these quants will be deployed over the globe in a spanning tree. And oil is liquid. Hence, I would expect the oil experts use effectively Minimum Variance estimates of future oil flows.

The yield curve of oil distribution will be segmented by the depreciation schedules of the technology supporting these Quants.

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