Futures contract rolled over to the next month and the price was
higher, it's called Contango. Seems to me they should base
the crude price on spot market prices, this game happens every
month. Lately it's been more extreme than normal I think,
that is the higher prices on the farther out futures contracts but
some contango is usually the norm.
Contangois a term used in the futures market to
describe an
upwardsloping forward curve. Such a forward curve is
said to be "in contango" (or sometimes "contangoed").
Formally, it is the situation where, and the amount by which,
the price of a commodity for future delivery is
higherthan the spot price, or a far future delivery price
higher than a nearer future delivery.
The opposite market condition to contango is known as
backwardation.
A contango is normal for a non-perishable commodity which has a
cost of carry. Such costs include warehousing fees and interest
forgone on money tied up, less income from leasing out the
commodity if possible (
e.g.gold).
Posted by hornsant on 14th of Feb 2009 at 10:39 am
Contangodescribes a well suplied mkt as oposed to
Backwardationthat describes poor suply. In
Contango the front contract is cheap and in Backwardation the front
contract is expensive, you can also call it Backwardated.
Correction to my last post, March Crude Oil futures expire next
Friday, so that was probably not a factor in yesterday's price
rise. Meanwhile, interesting interview with Hochberg of
Elliott Wave on financial sense this weekend; starts about a 5th of
the way into the audio clip. He's followed by Michael Panzer
who has been pretty accurate with his economic forecasts.
http://www.netcastdaily.com/broadcast/fsn2009-0214-1.mp3
Also, second part is an interview with Dr. Marc Faber which
might be interesting;
http://financialsense.com/
Posted by canadianguy on 13th of Feb 2009 at 04:18 pm
DXO and USO don't have the front month contract for crude oil at
the spot price. They usually have next month's oil price, I think
they change it at a set date early each month. DXO has a variety of
different months' oil prices, which are far less volatile than the
spot front month price.
OIL
Posted by rogerv on 13th of Feb 2009 at 04:06 pm
Spot oil up $4.00, oil stocks up today, however EFT's OIL,USO,DXO down ???
Anyone explain ?
Do a search - Market
Posted by leepartacz on 14th of Feb 2009 at 09:35 am
Do a search - Market Folly. Article will explain.
Futures contract rolled over to
Posted by homer on 14th of Feb 2009 at 10:06 am
Futures contract rolled over to the next month and the price was higher, it's called Contango. Seems to me they should base the crude price on spot market prices, this game happens every month. Lately it's been more extreme than normal I think, that is the higher prices on the farther out futures contracts but some contango is usually the norm.
Contangois a term used in the futures market to describe an upwardsloping forward curve. Such a forward curve is said to be "in contango" (or sometimes "contangoed").
Formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higherthan the spot price, or a far future delivery price higher than a nearer future delivery.
The opposite market condition to contango is known as backwardation.
A contango is normal for a non-perishable commodity which has a cost of carry. Such costs include warehousing fees and interest forgone on money tied up, less income from leasing out the commodity if possible ( e.g.gold).
Contangodescribes a well suplied mkt
Posted by hornsant on 14th of Feb 2009 at 10:39 am
Contangodescribes a well suplied mkt as oposed to Backwardationthat describes poor suply. In Contango the front contract is cheap and in Backwardation the front contract is expensive, you can also call it Backwardated.
Correction to my last post,
Posted by homer on 14th of Feb 2009 at 10:29 am
Correction to my last post, March Crude Oil futures expire next Friday, so that was probably not a factor in yesterday's price rise. Meanwhile, interesting interview with Hochberg of Elliott Wave on financial sense this weekend; starts about a 5th of the way into the audio clip. He's followed by Michael Panzer who has been pretty accurate with his economic forecasts.
http://www.netcastdaily.com/broadcast/fsn2009-0214-1.mp3
Also, second part is an interview with Dr. Marc Faber which might be interesting;
http://financialsense.com/
DXO and USO don't have
Posted by canadianguy on 13th of Feb 2009 at 04:18 pm
DXO and USO don't have the front month contract for crude oil at the spot price. They usually have next month's oil price, I think they change it at a set date early each month. DXO has a variety of different months' oil prices, which are far less volatile than the spot front month price.
Rollover
Posted by saturn6 on 13th of Feb 2009 at 04:14 pm
Contracts rollover to march on tuesday, as it is in contango Useless USO will have to pay a pop again.
Contango.
Posted by unsane on 13th of Feb 2009 at 04:10 pm
Contango.