It is simply amazing looking forward into 2007 the current activity in these contracts take a look at volume and open interest two years from now.
Looking forward it appears their will be no decline in Crude, but all you here from CNBC pumpers is how Crude is going to fall back to $40.00 and this will be a big plus for equities. based on this forward demand I just don't see that happening.
Much of the open interest in long-dated CL is producer/refiner/end-user hedging and/or long term macro plays, not punters.
One way to think about it is that buying a long-dated crude future is the same as buying some crude at approximately the spot price _plus_ a supply crunch option. The supply crunch option pays off if there is a refinery fire, Mideast terrorism, Nigeria war, whatever. It makes sense that the supply crunch option premium will increase as the time to maturity increases, thus you have increasingly long dated crude futures at higher and higher prices. If you short crude futures you are essentially writing the supply crunch option. Aaron Schindler Schindler Trading