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Goldman Sachs says the OPEC production agreement has had unintended effects, with oversupply from market-share battles pushing the oil market into contango. In contango, futures trade above spot prices, so traders are willing to pay more for later delivery.
Contango signals near-term oversupply and encourages storage, which weighs on spot crude prices and the energy costs that feed into commodity markets.
businessinsider.comAkin OyedeleMar 21, 2017After 187 past neutral policy events, Crude Oil (WTI) moved a median -0.1% over 5 sessions (49% higher; middle half -4.0% to +3.5%), and +0.1% over 20.
After 833 past policy events, Crude Oil (Brent) moved a median +0.6% over 5 sessions (54% higher; middle half -3.3% to +3.7%), and +1.3% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
