Crude Oil Backwardation
- Thread starter FinSci
- Start date
What happened was speculators got disappointed that the psychological barrier of 100 didn't break. It was found that we had more reserves than expected I believe.. I don't know I don't trade crude but I think we had more than expected. To complicate that matters Chavez (South American jerk) made comments that he would prohibit supply to the US and a major oil line exploded fueling the US from Canada. All of this showed that downward pressure was much stronger than speculators that felt oil would go up to 100 120 and even higher. In real terms most people with high IQ's know that the cost of oil is grossly higher than what it should be. I suspect further declines but there's no guarantee and anyone that knows that trade it is a very volatile commodity for only the best of the best to trade.
Yeah, I too was surprised to learn that it is a widely used term
http://en.wikipedia.org/wiki/Backwardation
Actually is the other way around, Its moving from a backwardation to a Contango.
Two Weeks ago the Backwardation was trading at 1,20, Now is under 0.20 cents. (.13 cents to be precise)
Two Weeks ago the Backwardation was trading at 1,20, Now is under 0.20 cents. (.13 cents to be precise)
I too have noticed this ; front months coming down a couple of dollars a day, and back months moving less than a dollar.
What do you mean when you say "the backwardation was trading at x" . Are you referring to a calendar spread?
how the hell did i get the word 'backforwardation' in my head?
Yes sir.
