May

22

 The chair reminded me of the idea of related markets.

He used oil as an example. That got me thinking.

I understand it can be a fool's errand. Time spent analyzing oil prices beyond 90 days can be time wasted.

However, oil is currently in backwardation. After this summer, prices are in a steep and consistent decline. WTI approaches $80 in 36 months.

This trend suggests strong macroeconomic forces are framing forward prices. I'm not sure I understand all those forces.

Is it oversupply?

Is it Keystone XL or related oil trains?

Is it deflation?

Is it a slowdown in the economy?

Are production costs declining?

Are investors dumping ETFs or index funds?

Isn't it odd that the crude backwardation is almost zero at the time of the expiration? Some body is profiting handsomely from the positive carry each and every month….


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