John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (9444)	5/21/2008 11:29:49 PM
From: rich evans	Read Replies (2) of 33421

I don't understand. Isn't a cotango situation the norm? If I agree in a futures contract to deliver oil at 140 dollars a barrel, to make it a no risk situation, I would have to buy oil at the spot current price and store it at a cost, and pay insuance on the product and lose interest on my investment. So the price I would want in the future is enough to cover all those expenses plus a profit. So why shouldn't oil sell for more in the future and not less (backwardation). And if I was a producer, I would want to factor in inflation, dollar value etc to decide on the future price I wouild sell at.Rich

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