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John Hussman: Assessing Oil in Contango
Posted on May 27, 2008
Excerpt from the Hussman Funds' Weekly Market Comment (5/27/08):Normally, the oil futures curve is in backwardation, which means that futures prices for distant deliverydates trade below the current spot price for oil. Occasionally though,longer-term futures trade well above spot prices, evenadjusted for interest rates and cost of carry. Often a contango emergesduring a period when the spot price of crude is declining usuallywith a resulting acceleration in the decline (as we observed severaltimes during the 1990's). In recent days, we've observed a contangodevelop between spot crude...
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