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The Futures Curve Is a Market Management Tool
When we get into backwardation, you're calling oil out of storage. And the steeper that spread gets, the more expensive your storage options are. So basically everything is economic, VLCCs, floating storage, all that stuff. It's just basically giving you that signal. The market is oversupplied, don't put that oil in the market, put it into storage. That's what Contango says. Vaporation is exactly opposite. Market needs oil, take it out of storage, give it to the prompt market. We need it right now because there's not enough prompt supply coming on the market.