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Get long June Crude Contract $64.50/ 4-9-07
- Thread starter myminitrading
- Start date
Quote from myminitrading:
Demand
A $3 spread between front and next nearby reflects a total lack of demand for the commodity at present. I think more accurately it reflects a glut of oil, which is due in part to refinery outages and their correspondingly lack of demand for crude to refine into products. Note the gasoline market is highly backwardated due to the shortage of it and the worry about a lack of supply in the near term. In the long run these astronomical crack spreads will cause the refiners to speed up their maintenance and get back online to take advantage of the hefty profits afforded to them by current crack values.
Quote from PJKIII:
A $3 spread between front and next nearby reflects a total lack of demand for the commodity at present. I think more accurately it reflects a glut of oil, which is due in part to refinery outages and their correspondingly lack of demand for crude to refine into products. Note the gasoline market is highly backwardated due to the shortage of it and the worry about a lack of supply in the near term. In the long run these astronomical crack spreads will cause the refiners to speed up their maintenance and get back online to take advantage of the hefty profits afforded to them by current crack values.
I assume by "hefty profits" you mean that gas prices are expensive compared to crude prices?
Quote from PJKIII:
A $3 spread between front and next nearby reflects a total lack of demand for the commodity at present. I think more accurately it reflects a glut of oil, which is due in part to refinery outages and their correspondingly lack of demand for crude to refine into products. Note the gasoline market is highly backwardated due to the shortage of it and the worry about a lack of supply in the near term. In the long run these astronomical crack spreads will cause the refiners to speed up their maintenance and get back online to take advantage of the hefty profits afforded to them by current crack values.
I see, so a negative spread between the front and next nearby must reflect more demand as shown in the US Dollar contract.
I doubt it.
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Quote from myminitrading:
I see, so a negative spread between the front and next nearby must reflect more demand as shown in the US Dollar contract.
I doubt it.
Doofus.
Apparently blissfully ignorant of the concept of carry/financing. It's not a supply/demand equation. The swap is embedded, hence the discount.
So far so good, crude now @ $65.23.