Spread between spot and futures to narrow. We note that crude oil futures curve has flattened with the 9 March 2010 spread between spot delivery and one-month futures narrowed to its 18-month low of 40 cents (vs. US$2.35 on 30 Dec 2009). The potential backwardation (i.e. spot price rising above longer-dated futures) suggests that oil demand would likely catch up with supply going forward, thus capping downside risk to crude oil price over the medium term.
Oil & Gas : Stronger Contract Flows In 2H 2010
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