Various market-makers hold inventories and stand ready to buy and sell commodities, connecting suppliers and end-users. These arbitrage and market-making activities are often undertaken by the same firms and are difficult to disentangle. Of course, there are limits to the extent to which prices converge in global commodities markets. The recent behaviour of oil prices is a particularly telling example of these limits.
Western Canadian crude oil has been selling at a deep and varying discount compared with the world price. This discount is due to the limitations of our transport network as well as differences in grade.