Oil spreads

[trader jose]

Hello All,

Somewhat new to trading the oil markets and was looking for insight and opinions on these spreads. I have been watching and "trading" it for a couple of months and even though i love the volitility and movement, i cant seem to figure out why the spreads move like they do. Any thoughts out there?


Thanks in advance,
trader jose

 

[Moneycat]

What kind of spreads? Calendar or intercommodity?

I am more into grains - you must know of new/old crop spread - and therefore the only spread I can figure with (say) oil is something like december vs. june...

But I here to learn!

 

[trader jose]

What kind of spreads? Calendar or intercommodity?

I am more into grains - you must know of new/old crop spread - and therefore the only spread I can figure with (say) oil is something like december vs. june...

But I here to learn!

calendars mostly

 

[TWI]

Why contango to back? All to do with what to do with physical product due to forward structure. If good contango and not excessive demand then producers do better to store it and carry it so decreasing carry. If it makes less sense then sell fornt end and carry widens.
When high demand from consumer/refinery then market will become inverted. Historically this is crude structure but in past year carry has been wide and every expiry got trashed. Also lot of index money rolls which has short term effect on front spreads which is why front spreads are so much wider than forward years. Best bet is to try and trade the technicals on these spreads rather than try to trade the fundamentals as they are very hard to read. Personally think crude will gradually move back into backwardated structure over next year.

 

[Paulds11]

TWI, out of interest what platform are you using to trade your spreads and Futures?

 

[TWI]

I use a number of platforms, Pats promark, TT pro & Barx. Also use TS brokerage direct.

 

[Paulds11]

TWI.. that was most helpful, thank you so much

Dude!!!!! thats some top end platforms..wow..your fees must be very very high... but then again your trading account must be very very good to absorb such costs.... it would seem theres no shortcut when it comes to platforms.. I think Ill start a platform thread under Spreads to get closer to the nuances of each..
Cheers