Whats going on in crude spreads ???

J

J-Law

Hello guys.

Been looking @ the crude market, the futures spreads specifically.

Looks like the front month spreads like Jan/Feb are selling off even when spot is up $3.82/barrel. While the back or deferred spreads such as Mar/June & Mar/Sep are rallying.

Can anyone speak to this ???
 
It could be delivery/expiration-related gamesmanship. Large traders max-out the certified storage capacity, initiate massive short-positions in the front month(s), then attempt to crush the market with more shorts upon expiration in order to shake out weaklings. This would tend to remove premium from the front-month contract(s). Similar stuff goes on in natural gas.
 
You are brilliant!!!!! (as usual)..

could be delivery/expiration-related gamesmanship. Large traders max-out the certified storage capacity, initiate massive short-positions in the front month(s), then attempt to crush the market with more shorts upon expiration in order to shake out weaklings. This would tend to remove premium from the front-month contract(s). Similar stuff goes on in natural gas.
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J-Law------The "movement" that you believe you see on that chart is probably because the September-08 wasn't trading tick-for-tick with the March-08. The actual bid & offer for the spread was steady but the March fluctuated several dollars before the September posted another trade. The chart doesn't properly represent reality.
 
Gotcha. I follow. Sep contract posts a bid or offer on board, while March actually prints.

Spread catches up once sep finally trades.

My mkt reporter/clerk days just came back to me !!! It has been awhile.


Thanks again,

J-Law
 
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