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WTI Crude Slumps To $43 Handle As Contango Collapses To 5-Month Lows Amid Growing "Over-Supply" Concerns
At $43.96 (for the Dec contract)...
WTI is trading at its lowest level since August 28th (in the middle of the month-end massacre).
The WTI-Brent spread is at its widest in over 2 weeks "stressing the need for U.S. output to drop to get rid of the oversupply," warns Commerzbank commodity strategist Carsten Fritsch. Even more worrisome (for future hope), is the plunge in prompt contango (1st month - 2nd month) which has collapsed to 5-month lows.
This does not suggest good news on the horizon, as Fritsch warns, "unless we get news on U.S. production we should remain at these levels."
Charts: Bloomberg
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Oil is so 20th Century
supply and demand....so 20th century...I liked when the banks controlled all commodity prices.
A lot of "cheap" oil is still being imported, driving our production into the ground (pun not intended).
I view the Saudi flooding of the markets with cheap oil to drive out US production as an act of war. If Russia were doing this to us, think of the MSM response. Instead, only crickets . . .
Sweet another " BUY " article
and bullshit stocks are green. nothing to see here.
Maybe they should remove ethanol from the gasoline mixture. That would increase demand for gasoline by 10-15% from current levels and they'd be selling a better product. Hell even food prices might drop. That might put more money in the hands of the consumers.
Sometimes stupid corporations and people deserve a swift kick in the nuts.
U.S. corn harvested for ethanol in 2012 could feed 412 million people for a year
http://foodorfuel.weebly.com/
The largest two uses are ethanol and feed for animals. The kind of corn grown by american farmers is not really suitable for human consumption, unless we are all cows being led to slaughter...oh wait a minute.
A more imp[ortant point about the headline of this article. Contango is typically considered the difference between the deferred and the nearby. So the chart of the spread between spot and the next futures (in this case between January which is right this second trading 44.99 and December or spot which is 44.09 is +90 cents) is strictly speaking backwards, or the reverse contango. In other words contango is growing (bearish) not collapsing (bullish) Switch the signs and what you have is backwardation.
I bought the Dec 2016-Dec 2015 contango earlier this summer at about $1.80 (crude spot at about $63) then foolishly traded myself out of it for a relatively small gain given that it went to between $7 and $8. Long contango (short the front month and long the deferred)( equivalent to short backwardation) is typically a bearish position. So a minor technical point about the terminology of the article. But as this is a market oriented site, one would do well to get the conventions technically right
JustObserving: That is a lot of diabetes and failing kidney cases!
oversupply??? LMFAO!!!
How about NO FUCKING DEMAND!!!
orangegeek: Several more wars may correct that problem.
Don't worry about running out,record production levels coming down from Canada.Warren Buffet making a fortune off of rail.
Peak oil is a scientific and physical certainty. The timing isn't very well known but if you look at world wide production rates, you'll see that we've been essentially flat since 2004 or so.
What we saw in 2008 was peak oil recession #1. We are likely sliding into peak oil recession #2. The reason why prices plummet has to do with a strong dollar crimping demand worldwide. It's the anti Ruble, anti Russia/Syria policy and a strong dollar is part of that policy.
Peak oil recessions are theorized to start with a spike in prices as "growth" hits the limits of production, results in a reduction in demand, lower oil prices, recession... rinse and repeat.
I was told sex with a virgin cures contango, is this true?