Wednesday, February 04, 2009

Oil Contango Signaling New Bull Run in Oil?

FT Alphaville: Bye bye oil contango?
The contango — with us since the latter part of last year — appears finally to be narrowing both in the WTI and Brent markets, especially between the two front-month contracts.

We caution it is too early to say if this really suggests a complete flattening of the curve is imminent. However, it is worth noting considering the theory that a new bull market can only begin when the contango has fully dissipated.
JCB Energy estimates that 11 members of Opec bound by output restrictions reduced crude production by a massive 1.57 million b/d between the end of December and the end of January...JBC Energy believes that the impact of Opec’s most recent efforts should not be underestimated and that the group is serious about reducing the current supply overhang.”
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