Location Transport

When crude oil contracts are traded how does the shipping of the actual oil work?

Lets say theirs an oil contract on the NY Merc for 1000 barrels of oil @ $40. Lets say that oil is in say Africa and needs to go to the USA. Is shipping for the oil included in the $40 price? How does that work?

Public Comments

1. The prices you see quoted are for oil at the production site - you pay freight !!
2. 1) The delivery location is the "inter-connect" in Cushing, Oklahoma. Go to the NYMEX website for more info. 2) African oil would have to be shipped separately and satisfy the quality guidelines in order to be deliverable. 3) Futures contracts should be used for hedging, not merchandising.