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I have a dream! CL yield curve becoming fair again... it can take months though, with plenty of time decay in the mean time. We had better be right this time, because I've just legged in at a nice round $20 a pair (would that be the cost of production?) Note I said "legged in" (at 115-95...

Why then is NYMEX watching all that manipulation happening before their very eyes (with Saudi's defecting long ago to a fairly priced benchmark) and why don't they simply make all WTI-based contracts (QM alone is not enough, because it is hedged with CL) immune to this sort of last minute...

Oh, really? They don't care a thing about retail traders or financial longs. Because if they did the simple solution would be to follow the Brent example and switch to (better: introduce in parallel for comparison) a cash-settled contract. Because what we have here is a tacit/gentlemen's...

Notice also in that chart from Feb 22 that it was possible to leg out of the front month and leg in into the next month at the same price of 94! So if you were prepared to take some directional risk for half an hour, you (The Market Maker, Commercial, Bank Arbitrage Desk, etc) would be able...

More like the Cushing urban myth. They want you believe that so that you rolled your financial longs at their exorbitant 40% annualized markups. Those with the permission to play in the last hour of trading in the CL March contract made 3 points (40% annualized) on the "Cushing syndrome" myth...

So you plan paying someone 30 dollars per hour to invest in oil? If you are an investor, do yourself a favor and find something less costly to carry. Like oil company stocks or Brent crude oil futures for example. Unless you fancy losing double digit returns per year in carry costs embedded in...

That can be generalized to all time periods, and trading in general. The worst enemy of performance is the "Midas touch" syndrome. Thinking we can "diversify" our trading into new "plays" just because our main business plan is making money so effortlessly. So it must be easy, right? Straying...

It is a indeed a bet, that the Cushing monopoly ends (or preferably is ended by NYMEX) sooner than your capital bleeds dry in carry costs. Look at calendar spreads - next month contract is also a benchmark like Brent - and there we have the same relentless time decay: a point a day lost to...

They had better make most of it because the good ol' days of cornering the markets and milking them for yield are numbered. You won't get sentenced for that like the Norwegian pump-and-dump (retail) traders were, because that would be too socialist I suppose, you simply won't be able to dictate...

Well, +/-3 is the typical spread size (and indeed usually in favor of the superior WTI). We are now 4.5 times that typical spread in the front month, so the only comparison of a rubber band getting stretched so far would be small caps during the dotcom bubble. Statistically speaking it is a...

The yield curve for Brent suddenly turned from flat into upwardly sloping yesterday, with around 0.5 pt difference between each consecutive pair of expiries. That info on its own might be merely the sign of an ongoing rollover (Feb 11th being the last trading day for Brent March contract), and...

The Cushing syndrome* explains the contangoed yield curve (the time decay in CL is currently far worse than buying front month vanilla options), but not why the inferior Brent is still 10+ points more expensive than WTI... That Brent 10-point premium over "fair" value of around 92 (CL resistance...

Except... Volatility is also a commodity:) VIX futures contract did spike 2/3 during a single exceptional day... IMO leverage should not have been allowed there, at least not on the short side. But I suppose that Feb 2007 jump is just like the track record of put sellers (such as Victor...

Brent is 5 pts above its long-term trendline, and it expires earlier, so I think it may give first. Unless Bone orders his followers to chase the divergence all the way up to 100:)

Always enter on your stop!:) Are you re-entering the spread now that correlation seems to be returning? The heavy contango might be a problem though, it would have to come down or move over to Brent (as you would expect if they started to short the front month there). I think I will add to my...

Some are doing just that, but not to the front month... Contango front-next just hit $3 (5-10 times recent CL standards). Last time I saw such expectations of mean reversion was in volatility futures back at the recent market top when the front month traded in Feb 2007 at 11(0), while the next...

Could you also chart Brent crude oil for us please?

There is also one more source of support for the God forsaken CL. Back then at 140 you did not know in advance that CL would go down those 100 pts. You had to make a directional bet (power to those who did). Whereas here we have a divergence in the price of two nearly identical things...

Then get on board. I mean not literally of course, only futures can solve their little oversupply problem. Let them earn more for their hard extraction job!:) You could produce full QM's worth of oil for the current spread - such irrationality is hard to come by in bull markets...

Have you heard of the Royal Dutch Shell pair? :) It also had virtually the same underlying asset on both sides... well, in fact precisely the same assets... But as for your question, the crude oil spread (and I would be talking my book here). I sense that convergence is near. This is based on...