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Anyone managed to find a way to trade out of (i.e. roll) the cl spreads which are getting wider in the front months but less pronounced just a few months down the road...

Is this backwardation here to stay or just a temporary geopolitic risk induced phenomenon? What are the principal drivers behind it?

Bump! Geopolitics and shift to commodities are kind of shaking the picture now despite seasonal factors, however is this backwardation here to stay?

Mann, it's not about wti exports, that's even illegal, but exports of refined products which keeps the two connected. There is certain dynamics and ranges in which the spread can move. Btw, you can see that WTI came down this morning while still back of the curve shifted even more down...

Besides also nobody dares to explain how come the shapes of WTI and Brent curves diverge so much? Judging by the difference in steepness now, it would indicate never ending expansion of wti/brent spread. How fun is that :cool:

Glad to see that someone else is also looking at this thing lol :) Now we don't have Syria, Libia and stuff to "explain" this indeed strange behavior so clever journalists came up with the excuse of pipeline...Forgetting on the way that just a few months back they've been using exactly same...

I am sure they know it all. Look just what they did with eurchf a few months ago: SNB floated a rumor of moving the floor to 1.25 and then sold off the pair on the rally. That way they managed to actually reduce their fx reserves and even made a small profit since they were buying @1.20 and...

I can't argue, if you've got really strong arguments btw And I laid here last week what I think is a very solid trade idea, so I don't see why I should be bashed just because the trade didn't work out yet However there are some encouraging news from Dubai crude and I bet the producers will...

So basically if the prices stay level or rise, you are guranteed a 4$ profit. Only if prices drop, and drop for more than 4$, you realize a net loss, in dollar terms. In terms of oil in the tank, you are back where have you been - same quantity of oil you had, just it's now worth less in dollar...

Lol why? The prices might fall till you get future's delivery? Then you change strategy and do something else. In the end you ended up with a same quantity of oil as you had in the tank, risk free. Of course you could have straight sold at a higher (current) price, but than it's a straight...

With only difference that it *might* happend that they don't converge when the April comes for expiry...or converge only partially. And what do I do then? I have to roll contracts and it might happen that front end of the curve is the steepest and thus by rolling I am paying a rolling yield...

Ok this makes sense, but still doesn't account for oil trading firms and tank farms...Where are they now?? Today the difference in price between April and August contracts reached 4$! You sell the oil now (there's plenty of it sitting around) and have it delivered back to you in 4 stupid months...

I doubt any book can explain every situation in the market, but till I read it, how would you explain this crazy backwardation? Now we don't have Syria or nuclear strikes to justify these crazy front month prices which are not falling despite "taper on" mentality. Even on days when there is a...

I've looked up this some more since the backwardation widened again today. It's completely irrational since the rumors are they are going to reduce the imports to protect the price and domestic US production is not enough to cause a glut alone. Every positive price shock in the front months...

Also here: http://www.eia.gov/dnav/pet/pet_stoc_cu_s1_m.htm Btw, rbob and ho are seasonally demanded in winter (ho) and summer (rbob). But in spring?? That doesn't justify the price premium for spring months compared to (cheaper) summer months futures.

Sorry, a mistake, spring months are much more EXPENSIVE than summer, that's counter-intuitive to seasonality. Tanker inventories: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRSFP31&f=M

So the glut will move from Cushing to Coast and what's the difference? In terms of pipelines they should not have any effect, both Keystone and this one... I suppose also it will be impossible to quickly raise refining capacity and export out the products, so yes the price might fall...but then...

Same thing lol, even worse since Feb is more expensive month, then after that prices start to decline but still spring months are much cheaper than summer months which is counter intuitive due to seasonality and supply/demand dynamics forecasted by EIA (among others)

You can, if you have a highly utilized storage tank you might decide to dump a percentage of oil at a higher price and simultaneously buy the next month and have it delivered. I wonder why is this not happening, I doubt those tank farms have no oil inside to sell right now.

Ok, that's another issue, although: Take the front month (GCLF4) i.e. Jan crude and compare to G4 i.e. Feb crude...there is a spread of about 0.27$ although the Jan contract expires in 2 days. It will definitely converge (with spot price) only once that the delivery month starts, but in order...