Is Contango Coming Back in the Crude Market?

Is Contango Coming Back in the Crude Market?

July 31, 2020

The chart below plots the forward curves for WTI Crude futures contracts.  The black line plots the settles as of July 30, 2020, with the September contract settle at $39.92; the red line plots the settles of two weeks earlier, July 16, 2020, with the August contract settle at $40.75.  The contango structure of the curve has steepened as the front of the market has dropped from $40.75 to $39.92.  A falling market generally increases the contango and, in turn, pressures prices.  The contango should be monitored.

The chart below can be constructed in the Fundamental Analytics platform under Prices > Energy > WTI Crude Oil > Analysis.

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The information provided here is for general informational purposes only and should not be considered individualized investment advice. All expressions of opinion are subject to change without notice in reaction to shifting market conditions.