COLUMN-Oil traders bet on Saudi Arabia and White House lifting prices: Kemp | Reuters:
Oil traders are becoming very bullish on the outlook for prices, betting that Saudi Arabia will do whatever it takes to tighten the market even if consumption growth slows, helped by U.S. sanctions on Iran and Venezuela.
Brent’s calendar spread for the second half of 2019 has surged into a backwardation of 90 cents per barrel, the strongest for more than three months and a huge swing from a 70 cent contango near the end of last year.
For many traders, spreads rather than spot prices are a better indicator of expected balance between production and consumption (“Price relations between July and September Wheat Futures at Chicago”, Working, 1933).
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