B-Jay,

I'm not sure what you mean by juggling the boats and I guess you mean the storage of oil offshore. Thing is we are again back in Contango land again as the spread between the spot and six month out WTI has crossed the $10 a barrel mark. If you have a spare tanker lying around then fill it up at spot and forward sell your load. Pick up your free cash with no risk and say thank you. This is the main reason oil is being stored offshore at the moment and may or may not be contributing to supporting the price. All the major players are in the game and are making boat loads of money, excuse the pun.

I warned a few weeks ago in one of my posts about the cheats in OPEC and the fact they are not sticking to their quota's. This I think has more bearing on the price than the storage situation. Greed has got the better of them and now they are paying the penalty for the drop in price.

As I said before I believe it is not a time to buy and hold anything. Currently I am playing again with spreads. The outstanding one is the spread between Brent and WTI. The June contracts saw a spread of + $5.5 for Brent when WTI historically sell at a premium to Brent. Unfortunately the spread widened too close to the expire date for Brent so not a good idea to jump in there. However the July contracts are looking interesting as there is currently a $3 spread in the wrong direction and the WTI July contract is trading $4 above June. This distortion is being caused by the Cushing inventories at 37 Million barrels which is extremely high. We are entering the time of year when consumption begins to pick up and once that is seen I guess (always a guess of course) the discount to Brent will disappear. I am keeping a close eye on July contracts and will also monitor August spreads to find a good entry point (sell Brent, buy WTI at the same time).

For WTI it does seem there is good support just below $70 and the average price from July and 12 months forward is $80.60. This is a good sign, however at the moment for me it does not matter where oil goes with this type of pairs trading.

For the record gold and silver are also out of sync for the moment. Couple of days ago I sold silver bought gold. So far not much movement but I will wait patiently till they reallign (I hope) and cash in.

Den