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Contango Disappearing Fast: Backwardation And USO Profits Next?
The recent run up in oil prices has resulted in some dramatic shifts along the crude curve. When we first discussed the contango effect (and some amusing risk free ideas as a result), the 12 month spread was roughly $25.
Today's NYMEX closing crude curve shows that relationship has collapsed to a mere $7, a 70% drop! At this rate we should get backwardation within the month. This should also help long suffering USO holders, as all the pain they suffered during contango will be a magnified profit under backwardation.
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USO is not profitable in contango - just chart it
Um just chart USO versus CL1- no bueno- or look at UNG vrs NG1