Crude spreads, Contango/Backwardation… Jeff Kemp, Reuters

March 14, 2017 by Jim Colburn Leave a Comment

Jeff Kemp does a nice job describing backwardation and contango in oil markets here: http://www.reuters.com/article/oil-opec-kemp-idUSL5N1GR4IB

He gains much “street cred” by referencing Holbrook Working:

“University’s Food Research Institute explained the relationship between stock levels and futures prices more than 80 years ago (“Price relations between July and September wheat futures”, 1933).

Working was examining grain markets, but the same relationships are present in the market for any storable commodity.”

Here are some excellent charts which help put time spreads in perspective (Do read the whole article):

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