KilonBerlin wrote:What is the normal situation on the oil market? Contango or Backwardation?! I always thought its Contango when the current price is high and Backwardation when the actual price is low...
I'm no expert, but I do tend to keep an eye on various financial markets.
In my experience, generally the Crude Oil markets tend to be in contango in normal times, like many futures. I think the concept is this reflects anticipated costs like storage costs.
In general, again in my experience, when the oil market gets very weak, then backwardation tends to be the rule.
Now, my experience in Futures trading is limited, so please don't accept my personal experience as "the truth" -- it's MY experience based on when I was paying attention.
There are NO hard and fast rules for this kind of thing. Currently, for example, it looks like the WTI futures are generally in Contango, mostly ranging between $55.50ish and $58ish once you get to spring '17, and higher than spot for all futures contracts except Feb. '17, unless I missed something.
https://www.barchart.com/futures/quotes ... ll-futures...
Instead of trying to confirm or deny your casual thoughts on what contango and backwardation mean, I'll just provide definitions from a credible source, which agree with my understanding of the concepts:
Contango is a situation where the futures price (or forward price) of a commodity is higher than the spot price.
Normal backwardation, also sometimes called backwardation, is the market condition wherein the price of a forward or futures contract is trading below the expected spot price at contract maturity.
(My source is Wiki: I like Wiki for definitions as it tends to use comprehensible English instead of playing specialist or lawyer games with the words. YMMV.)
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.