After the Light Sweet Crude August futures contract expires on Monday July 22nd, Petromatrix and other energy analysits are predicting a period of deep backwardation for WTI. Previous gluts and contangos are no longer factors. Instead, the changes in supply levels are expected to push September/October WTI backwardation to the highest level since the invasion of Kuwait by Iraq in August 1990. Indeed, it is likely already priced in. Though many things have changed both in crude oil sources and the markets since 1990, what we had in 1990 was an invasion that didn’t take any smart observers by surprise, followed by a buildup to war that left plenty of time for traders to plan how to profit from Gulf War Part 1. And profit they (we) did.
The PDF of the Petromatrix GmBH full report is here (via the CME Group)