Gartman:Demand infer to be less for oil
It would seem that if you need to invest more to store oil rather than sell it you are expecting a lower demand for it in the coming months:
As we have noted here in recent days, the contangos for both Brent and WTI continue to widen, seemingly inexorably, as crude bids for storage and as the long-only funds continue to do their buying in the deferred futures. This has given rise to a very interesting phenomenon where the nation’s crude oil refiners have become storers of crude rather than refiners of crude. Refinery margins are low but returns to storage are large… and are rising.
Hence the only buying taking place is by the refiners and others in the industry who are willing to secure storage facilities, including tankers off-shore, buying spot crude and hedge it in the same deferred futures that the funds are bidding for. This is the strangest of symbiotic relationships, but it is working for both.
Related posts:
- Refining News Will Stay Strong
- The Inventory Code: New Ways Investors Can Cash In on Volatile Commodities
- CFTC is going to clamp down on oil speculators
- Oil supply and World GDP: The Correlation
- Dennis Gartman Declares Defeat in talking down the market
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