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United States Oil Message Board

  • stevie_b_in_hawaii stevie_b_in_hawaii Jul 17, 2013 3:30 PM Flag

    What Happens When You Build A House In The Sand?

    Fear over Egypt created a oil bubble from $94 to$104

    Sucker Bets are being made on oil right now on the Long Side.

    Light Sweat Crude Futures are showing a big drop coming in Oil prices.
    Big Boys are betting on lower prices in 2014 & 2015. Smart Money
    Moving To The Short Side.

    Long SCO

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • That is not what backwardation usually implies. It generally is a sign of tight current supplies.
      That sounds strange considering that we are supposed to have an abundance of oil currently in the US.
      However Cushing stocks include large quantities of heavy crude that does not meet the specifications of the WTI futures contract.

      Credit Suisse also suggests that the current steep backwardation reflects the unwinding of a kind of carry trade where traders were taking advantage of contango. Now that the contango is no longer there they are having to unwind their positions which involves them buying near month and selling further out contracts which serves to steepen the backwardation.

      I'm not sure the real reason but I'm sure it's not indicating a big drop coming in oil proces. That shows a lack of understanding of the meaning of futures which should not be interpreted as a prediction of future prices.

    • MrB
      Think 115 is in the cards? I have sco and DTO and am waiting a little longer to average down. Oil could run till Sept possibly before dropping.

 
USO
35.76+0.44(+1.25%)Aug 29 4:00 PMEDT

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