May '20 crude futures = $20, June '20 crude futures = $28

Discussion in 'Commodity Futures' started by SteveM, Apr 14, 2020.

  1. donnap

    donnap

    Yeah, the kind of dreams that make a mess.
     
    #21     Apr 16, 2020
  2. People rolling their WTI longs (from May to June) are getting smoked. If you are long USO, OIL or BNO ETF, this is exactly what you are doing. Avoid these like the plague when the contango is trading at all-time width differential.
     
    #22     Apr 18, 2020
  3. korzes

    korzes

    @VolSkewTrader so any idea what to use for when Im long for oil ?
     
    #23     Apr 18, 2020
  4. Here is a really good article on the pitfalls of investing in USO or other oil ETFs in this current environment.

    https://seekingalpha.com/article/4338311-betting-on-higher-oil-prices-uso-is-not-right-vehicle

    USO is all about timing, not a long-term hold investment. You're better off buying CL Nymex futures further out on the curve...like WTI September (CLU20) or December (CLZ20) if you want to bet on oil going up in the next 6 to 9 monhts.
     
    #24     Apr 18, 2020
  5. 2008/9 was also super-contango, but prices were higher. I think 3-4 months out was in mid-fifties with the front month dropping to mid-40s at expiration for a while. In percentage the spread is higher, must also be greater vs margin requirement.
     
    #25     Apr 18, 2020
  6. KCOJ

    KCOJ

    This chart I’ve made shows 36-month forward curves (every 10 days) over the last 30 odd years.

    The simple graphic allows you to observe levels of contango appearing briefly in 2009 that are similar to today’s. But otherwise these levels are indeed historic.

    upload_2020-4-19_12-56-4.png
     
    #26     Apr 19, 2020
    hrokling, yc47ib and VolSkewTrader like this.
  7. The traders who had early and cheap access to storage are making historic money on the super contango.
     
    #27     Apr 19, 2020