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GRIM REAPER

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Crude Oil Profits Magnified Under Backwardation

posted on Mar 09, 2009 03:15AM

SideNote: The Oil crisis has not gone away and the savy investors are finding ways of making profits from the current backwardation that is coming at us like a frieght train. Those who invest into Silverado Green Fuel's future will have the oppurtunity to catch this once in a life time investment oppertunty tidelwave to help make N. America energy independent. THE GRIM REAPER

Contango Quickly Disappearing: Backwardation and USO Profits Next?

The recent run up in oil prices has resulted in some dramatic shifts along the crude curve (click on chart to enlarge). When we first discussed the contango effect (and some amusing risk free ideas as a result), the 12 month spread was roughly $25.

Yesterday's NYMEX closing crude curve (click on chart to enlarge) shows that relationship has collapsed to a mere $7, a 70% drop! At this rate we should get backwardation within the month. This should also help long suffering USO holders, as all the pain they suffered during contango will be a magnified profit under backwardation.