Re: Oil-The Significance of Backwardation.
It’s not the current price of forward prices that determines future spot prices, but rather it’s the SHAPE of the forward curve.
With the curve backwardated $9 to ’23, history predicts that more often than not, much higher spot prices will follow.
Spent the day looking at historical contango-to-backwardation flips, and in 7 out of 11 such scenarios since 1988, spot prices were significantly higher in the following year.
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