WTI Contango is flattening… is that bullish?
Last Thursday we examined the flattening of the NYMEX contango, stating:
”To wit, we have seen a material contraction in the NYMEX forward curve since August. At the end of last month spot WTI was trading at 95.6 cents on the dollar to the 6th contract on the curve. As of last Friday (the cutoff for yesterday’s DOE report) spot WTI was trading at 96.7 cents.” - The Schork Report, September 17, 2009
That sentiment continues to hold true this week, with spot WTI still trading at 96.7 cents to the 6th contract on the curve. This is not a recent irregularity but a gradual change over the last several months - spot was trading at 92.3 cents to the dollar in July and 95.6 cents in August. Overall, the relationship can be described as a decreasing gradient, July had a gradient of 0.725, Augusts’ was 0.484 and September’s 0.373, almost half the value for July.