Register to leave a comment, or log in if you already have an account
Lech,
Well, basically, the term structure of a commodity is the relationship of price for front month delivery months to more deferred delivery months. For example for crude oil, it basically trades on a monthly basis for 10 years forward with a delivery month every month. A contango term structure reflects weakness in front months, where the near term trades at a discount to deferred months. A backwardation structure is when front months are at a premium to back months. It is like a yield curve for commodity delivery months.
After the crisis we were in a contango, meaning that the front months were sharply discounted to back months. This reflected extremly low front term demand as a result of the crisis where demand dropped off a cliff.
We have been gradually drawing down stunningly large amount of global inventories and this has been reflected in the “curve”. Front month deliveries are now flat to back months and in Brent a premium. This is a bullish sign and the over all technical picture says that crude is about to move sharply higher.
Lech,
Well, basically, the term structure of a commodity is the relationship of price for front month delivery months to more deferred delivery months. For example for crude oil, it basically trades on a monthly basis for 10 years forward with a delivery month every month. A contango term structure reflects weakness in front months, where the near term trades at a discount to deferred months. A backwardation structure is when front months are at a premium to back months. It is like a yield curve for commodity delivery months.
After the crisis we were in a contango, meaning that the front months were sharply discounted to back months. This reflected extremly low front term demand as a result of the crisis where demand dropped off a cliff.
We have been gradually drawing down stunningly large amount of global inventories and this has been reflected in the “curve”. Front month deliveries are now flat to back months and in Brent a premium. This is a bullish sign and the over all technical picture says that crude is about to move sharply higher.
I can tell you more at lunch sometime.
http://bk.ly/xcw
?
Sorry
http://www.youtube.com/watch?v=lQlIhraqL7o&feature=player_embedded#
Bryant Park rink very crowded by lunchtime and beyond.
dona, I doubled my position in OIL last week. Also holding IAU, SLV, DBA, and JJG.
Pete – did you google the seller?
BH, your bkly link doesn’t work.
did you guys forget about the rink in Bryant Park? Seems lightly used before lunch.
BH…bad link, wouldn’t open