A contango futures market provides risk management companies (RMC) with the economic incentive to hold inventory in an oversupplied market. Buying and storing physical crude oil in Cushing, OK while selling deferred WTI futures contracts is an excellent example of crude oil contango storage. As the crude oil market rebalances and the risk of holding inventory is reduced, the difference between physical crude oil price and the deferred futures contract price will decrease.
Table of contents
Example of Q1 2015 contango storage play, Mark to Market performance and resulting profitability
Daily Mark-to-Market (MTM) Accounting
Tables and charts
This report includes 3 images and tables including: