How do oil prices work?
There are several points at which oil is bought and sold. First, someone (a production company) must extract it from the ground. Then, it must be delivered to a major shipping point (Cushing, OK for NYMEX crude, Sallom Voe for Brent, etc.) Then it must be shipped to a refinery to be distilled into gasoline, heating oil, jet fuel, etc. The refiners then ship the products to wholesalers, who in turn ship them to retailers (gas stations). Some companies (usually called integrated or vertically-integrated) combine several stages of the process within the same entity. But even the integrated companies still buy a lot of crude oil from independent producers. As to the futures market, it is simply a device that allows a buyer to buy oil for delivery at a specific date (and a bunch of other people to speculate in oil without ever seeing a barrel of it).
