Oil Contango Pays Most in Decade as Shell Holds Crude in Ships

If the market surges suddenly even on a rumor (say the Israelis attack Iran and Iran blocks the straight) the spot contract will go back to backwardation, but even on smaller rallies - oil doubling in a month from these low prices- the margin calls on the short position have to be met.

They can liquidate at any time, of curse,
but businesses have gone kaput on their hedges because they were not being able to finance their profitable cash position.

Big oil probably does not have that problem.

Best,

GC
 
Quote from nazzdack:

Would you be able to deliver oil that's 12 months old? Does crude oil have spoilage? :confused:
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It is hard to spoil something that is at least a few million years old.

Not even the SPR is buying and they can store another 25 million barrels. They were buying all the way up in July, 2008. I wonder if there were any crooked dept. of energy employees influenced by the oil corps to buy at those prices.
Traders who bought oil at the $40.81 a barrel on Dec. 5 could sell futures contracts for delivery next December at $54.65, a 34 percent gain. After taking into account storage and financing costs investors would earn about 11 percent, according to Andy Lipow, president of Houston consultant Lipow Oil Associates LLC. The premium, known as contango, is the biggest for a 12-month span of futures since 1998, when a glut drove crude down to $10.
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http://www.spr.doe.gov/dir/dir.html
 
Quote from tmarket:

It is hard to spoil something that is at least a few million years old.

Not even the SPR is buying and they can store another 25 million barrels. They were buying all the way up in July, 2008. I wonder if there were any crooked dept. of energy employees influenced by the oil corps to buy at those prices.

http://www.spr.doe.gov/dir/dir.html
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Don't quote me on this but wasn't there some sort of agreement made when everyone was panicking at $100 plus that SPR wouldn't buy until the price went below $70? I'm suprised they're not buying anything at these prices??
 
Quote from Papa Lazarou:

Don't quote me on this but wasn't there some sort of agreement made when everyone was panicking at $100 plus that SPR wouldn't buy until the price went below $70? I'm suprised they're not buying anything at these prices??
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congress passsed a low not allowing th whitehouse to add to the spr till jan1 2009, the white house has come out and sad they will start adding to the spr again onjan 1
 
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