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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area -- Ignore unavailable to you. Want to Upgrade?

To: badog who wrote (9482)	5/10/2005 2:20:53 PM
From: Crossy	Read Replies (1) \| Respond to of 37387

Badog, that's what you see right now.. Spot rate is higher, and front month futures are lower than far more month out.. in effect it pays to store oil.. this is a "static" issue.. no dynamics inferrable to me (as you seem to have reasoned) the seasonal part obersvation of yours is very important indeed. I would even tend to argue that it'S the physical storage happening now (which is indicated by the Contango) that might enable us to cope with Q4 and Q1/2006 projected demand.. so the Contango could be a "mirror of reality" .. of oil futures saesonal demand pattern fluctuations.. something related: there is obviously a LIMIT TO PHYSICAL TOTAL STORAGE in the US and everywhere else.. I wonder where that lies.. "So even with all the fancy footwork of contango's and futures pricing caused by seasonal variations, we are simply back to supply vs. demand driving prices" yes, undoubtedly, but the problem is "WHAT PRICE EXACTLY ?". There is more than one.. spot price, front month futre, second month future.. pick your favourite ! That is the main issue here. With futures markets, prices are not just "one dimensional" anymore. They include the time dimension. rgrds CROSSY