What’s happening to oil prices?
The bubble which exploded last July, resulted in a collapse which was seldom observed for a major commodity. Now, this is leading to a rare and huge contango situation.
And the last days we see an unprecedented inflow in oil ETFs.
The bubble which exploded last July, resulted in a collapse which was seldom observed for a major commodity. Now, this is leading to a rare and huge contango situation.
And the last days we see an unprecedented inflow in oil ETFs.
ETF owned barrels were at a low in November with 10 million. Now it is at a high of above 100 million.
Now, we mentioned before how this contango is influencing the roll-over factor in the pricing for an ETF as this ETF’s are based on futures contracts.
Now, we mentioned before how this contango is influencing the roll-over factor in the pricing for an ETF as this ETF’s are based on futures contracts.
An ETF as USO is not longer reflecting the correct spot price due to this phenomenon. This roll-over cost is eating away possible profits.
What if losses are showing up soon and investors are pulling out?
What if losses are showing up soon and investors are pulling out?
It is Goldman Sachs who pointed out that the number of barrels owned by investors is only down 13% from peak prices, despite a 70% decline in notional value of the price of oil.
But in the mean time GS thinks that the type of investors owning barrels, has changed. Retail and private banking investors are coming in while institutional investors abandoned ship some while ago.
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