Bruun,

The way I see it this situation does not happen very often, just like the price of Brent rising significantly above the price WTI. Normally WTI sells at a premium to Brent. In this case the future contract price has got way ahead of the spot and NEAR futures contracts by several dollars. These are opportunities the traders jump on when they see it happening.

Thing is these guys are not waiting around for the price of oil to rise, they buy their Spot or a February Contract and sell their December Contract at the same time. With the margin between the two at >$13 they know that they can cover all their costs for the next X months and still come out with one or two dollars profit on a barrel. We should not confuse these guys with speculators who never have an intention to talke delivery.

Multiply that by 50 million and as you can see they do OK. They don't really care where the price of oil goes as they have already made their deals. Money for nothing and your chicks for free as Mark Knofler says. That is my understanding of the present situation. Perhaps someone with more knowlege of oil futures can elaborate or correct me if I am wrong.

The good part of this is these activities will take multiple million barrels of oil out of the market temporarily. Can only be good for the price of oil but I guess even better for the shippers whose margins have been contracting severely last year.

Seems to me like an opportunity to do some DD on a couple of these companies.

Cheers

Den