Contango flattens in the back

Long term consumer hedgers have been drastically affected by the steep contango crude market. The prompt futures have been as much as $14 lower than same year December contracts. Call options appear dear looking forward at these levels. Today, however, we have seen a turn in the market with back months futures falling as much as $3 (December 13) versus Jan 2009. This may indicate that the carry market is fully valued with storage filling and long physical players starting to capture their buy and store strategy.

Consumers with long hedge strategies should have an opportunity to buy lower strike calls soon.

Please call or email if there is a particular level you are waiting for.