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Forwards do NOT predict prices. The SHAPE of the curve DOES indicate the incentive to store now and sell later or sell now. Just as the shape of the yield curve indicates economic conditions, the shape of the energy curves indicates the supply and demand balance.

Yes, you are talking about forward hedging. I'm talking about the "shape" of the curve. The shape of the curve dictates if and when to store and when to produce.

You are confusing things here. The marginal cost of extraction is going down for the oil we have at and near the surface, this is the economical oil. As we dig deeper over time, and I'm talking the next 50 years here, the oil will become more and uneconomical. As we get deeper into the...

Don't have time to respond now but all your points are misinformed zzz1.

Here is one way to think about this. Physical players have very valuable data about the market that you or I will never have. They guard this data closely. What we can do though is observe what they do with that data by examining their footprints in the market. We can see their footprints in...

I talk about spreads non-stop on the ACD thread. And yes, they are important for a short term speculative trader.

Yes. Nobody in the energy industry looks at the front month. All modeling is done on the curves. The front month is noise. The market fundamentals are expressed in the curve and yes, they offer predictive value as they incentivize producers to either produce or store and they allow for the...

The trend is NOT down. The price of oil will go parabolic with time. The marginal cost to drill that oil will go higher and higher. Eventually it will be uneconomical to drill. At some point I imagine oil will be 500+. But we won't be able to extract it even at that price.

Because the Saudi's have the lowest marginal cost of production in the world by a mile. They can produce at $10 a barrel and can sell oil for the next 50 years. It's free money. Where are you getting that their business is failing? The issue the Saudi Kingdom has is with their social state...

Brent is going into backwardation late summer. There is no blip dude. The curves are ripping across all strips. You really need to watch this shit. There is no "blip" to it.

Do you even watch the forward spreads? Do you even know where they are at? You might want to put a little more effort into this. Are you watching what's going on with Brent right now?

Volatility is at all time lows.

Just open an excel spreadsheet and you will see how ES long outperforms shorting the volatility ETF by a factor of 10. This is comparing dollar to dollar return on margin.

Love Giamatti! I didn't like Damian Lewis at first but he is growing on me.

The USD/JPY has been a 100 times better market short then the ES. Nobody is talking about it. Seems like I mentioned something about quiet trades before on here....hmm. :)

We had a very tight OR this year. That should portend a very big move this year.

Well, with 10k hedge funds out there, the problem of adverse selection will put most at a disadvantage. This is true of most large industries where the product offered is opaque, especially one like the hedge fund industry where charlatans can disguise themselves well.

When trying to read a tape, you ultimately need volatility. The S&P 500 is not moving. The 20 day stat vol is under 6. If a market is not moving by definition trying to interpret the move becomes an act of futility. The same could be said of crude oil. Once these markets start moving, we...

I disagree with that. Sure, you can harvest risk premium by simply showing up. But if you don't price it effectively, sooner or later, it will blow you out. Ask anyone who trades electricity.

I'm attaching a link and two pdfs on the subject matter. It's highly discussed in academia. Not saying there is an absolute right or wrong answer, but there is plenty of research to chew on. http://www.markhannam.com/preview/essays/essay2a.htm