WTI Calendars getting cheap - backwardation next?

Discussion in 'Commodity Futures' started by hrokling, Jun 19, 2007.

  1. The recent rise in wti-prices has been much stronger in the front months, and calendar spreads are getting "cheap" (well, at least they're down). Are we heading for backwardation?
  2. I'm stooping so low as to bump my own thread - anyone care to comment on the WTI calendar spreads shrinking steadily? Is this connected to lack of storage capacity?

    I don't trade these much, and know next to nothing about the market, but I have been watching these spreads for over a year and what I'm seeing now is not the way they've "normally" behaved in the past year.


    With close to 351 million bbls. of crude in inventory nationwide I don't see backwardation anytime soon, but the contango is gone for now. Today's inventory report showed a draw in products which I think was the driver of the bullish move today, but we also saw a draw at the delivery point for CL in Cushing, which adds support as the glut there is diminishing. I would be going out on a limb to try to explain why the contango has been eliminated other than the fact that we are well supplied now, but clearly there is no fear of any shortage of crude developing in the near term. If others have anything to add I would be interested...