Oil contango

[gooseman]

they are weekly. API is tuesday night and DOE Wed afternoon (UK times) although next week it will be delayd a day die to US holiday.

LTRO tomorrow-can barely wait.....

Freudian slip. that should read "due to US holiday"

 

[scose-no-doubt]

Thanks. They're not on any calendars I have.

 

[Martinghoul]

@Goose - You know where I can get a calendar with this type of release?

@Martinghoul - What balance sheet story and why is half-year relevant. I was a tool this time last year so I don't know what you mean.

Well, the "arb" trades re very capital-intensive. When/if capital becomes expensive/scarce (such as 2008 and arnd qtr/half/year-ends), it makes sense for contango to get a bit more extreme. That's the way I sorta think about it, but I could be completely wrong in this case.

 

[scose-no-doubt]

Tightest it's been since I started looking. Wonder what will happen after the numbers. I'm thinking this may have something to do with volatility.

 

[anley]

Scouse

You trade the spread by buying one month and selling short another.

It can be done 2 ways -

1. Buy a near month and sell a further month, or
2. Short the near month and buy a further month

The price of the spread can then move out (widen) or move in (shorten).

What you're not doing of course by spread trading is trading the price of crude.

As for the oil figures you're looking at they're very complex unless you have a good grounding of the petro industry. Not suggesting you don''t but if you don't the figures will help you as much as they'll hinder you. And if you listen to the experts, well, that's no different from listening to economists.

Hope this all helps.

 

[scose-no-doubt]

Yeh I thought about that buy/sell anley but broker spreads kill off that opportunity.
I just thought that if the cost of storage/transport must be close to constant so the diff in spread must be due to other factors.
Looking into what they could be. have some idea's but as you say it;s all guesswork without a grounding in petrochem.

 

[scose-no-doubt]

Does no arb principle mean that spot at date of delivery for futures tends towards futures price at last day of trading?

 

[anley]

Yeh I thought about that buy/sell anley but broker spreads kill off that opportunity.
I just thought that if the cost of storage/transport must be close to constant so the diff in spread must be due to other factors.
Looking into what they could be. have some idea's but as you say it;s all guesswork without a grounding in petrochem.

Wha do you mean by 'broker spreads'?

If you mean commission then commissions are only a factor if you're scalping. Hold a spread for a week or more and commissions aren't usually that much of a problem. But you have to make sure they're low to begin with.

Cost of storage is about $0.50 per month per barrel.

 

[anley]

Does no arb principle mean that spot at date of delivery for futures tends towards futures price at last day of trading?

You're asking a very complex question, one that could probably only be answered by someone with at least a few years of physical/cash trading behind them.

why don't you try to keep things simple and just concentrate on the price of crude.

Long, short or flat.....

 

[meanreversion]

"No arb" means punters like us need to take risk to make money from this market, there's no free lunch unless you have loads of cash, inside info and a few tankers.

 

[scose-no-doubt]

You're asking a very complex question, one that could probably only be answered by someone with at least a few years of physical/cash trading behind them.

why don't you try to keep things simple and just concentrate on the price of crude.

Long, short or flat.....

Well people could always offer experience in other markets

Spot has to trade at he level of the future some time doesnt it otherwise whoever fills the long future will lose out wouldn't they.

 

[MrGecko]

the textbooks tell us that the price of the price of the future must be the same as the price of the spot plus/minus any accrual of interest/storage costs until delivery. As the difference between now and delivery shortens, this income/cost reduces, and so the difference between the spot and the future narrows (assuming it is constant).

Of course the expiry of the future contract might not be the delivery date, and so there can exist a difference between the two at future expiry.

See Basis Risk.

(Never traded like this, just trying to help)

 

[justtradin]

Aug/Sep US Light spread been tightening over the last couple of days. Renminbi?

Anyone have any information on actual components of cost of carry for any commods or maybe just some learning materials showing pricing methods? I'd be much obliged.

I have found that nymex.com (Now cmegroup.com) and cbot.comcan answer almost any question that you have.

JT.

 

[scose-no-doubt]

merci

 

[justtradin]

No prob.

I sense a push lower coming (within 3 days) in the commodities but I am looking at Gasoline calls.

 

[scose-no-doubt]

Yeh was thing of checking out the OI on the oil ops for these months I'm looking at

 

[meanreversion]

I think oil should be $50, it's far too high to sustain any kind of meaningful recovery.

 

[justtradin]

Thinking is when I know I am doing something wrong. Dan Dicker says floor is $68 (I think it may be $64) but Dicker has made me so much money.I am adding DNDN and dndn otm calls.

JT

 

[anley]

Scouse

Futures theory doesn't make anyone any cash, ie if you're the world's number 1 expert on how futures are priced and the nuances of delivery/cash it won't make you a bean.

Price is therefore far more important as that#s what will make you money. The best cvourse of action is therefore this - let the experts price the markets to perfection and then you as a trader try to determine if that price will move higher or lower over a given period of time.

 

[meanreversion]

It's "scose", rhymes with "ho's".. not "scouse". Shame on you.