"Profit from your knowledge!"
The Bull Bear Trader discusses market events and news with an interest in understanding risk and return in both bull and bear markets. Discussion topics include trading and hedging strategies, derivatives, risk management, hedge funds, quantitative finance, the energy and commodity markets, and private equity, as well as an occasional investment opinion.
Friday, January 9, 2009
Crude Oil Contango, And Not A Tanker To Be Found
Crude oil is currently in contango as futures are trading at a significant premium to spot prices (see WSJ article). As of yesterday's close, spot prices were around $43 a barrel as May futures were trading near $50 a barrel. Unfortunately, to profit from the difference, you need to store the crude somewhere, yet the number of available tankers is decreasing fast. In fact, demand is causing shipping prices to rise nearly 50 percent recently, causing a increase in the Baltic Dirty Tanker Index.
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